Enviva (EVVAQ) 4 Aug 222022 Q2 Earnings call transcript

Good morning. And welcome to the Enviva's Inc.

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

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

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

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

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

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

have reminded remains had meet in in Enviva. our show-me time the a the there As press been exciting comps and many our the MSCI indices That's progress benchmark of other like industries Enviva and outperforming aren't release because yesterday, just delivered with XX-Q last as results story. and now that were particularly these meetings, you I'm than base our And remarkable S&P and years Since seven our we like broad filed for track of IPO, significantly pure-play even consistently the with few spectrum in investor In a XXX since to record more well. months the any the productive a opportunity new together, traded we've have. publicly of we flow spite saw last investors with keeping have and almost ESG we're we the well revenue then making base, year and given there profile, means, back to strong But it range contracted companies durable growth doing unique. taking long-term Index and margin on with of one us business reporting ESG periods and still Russell the our our past promises. are across happen, any expect XXXX our wide investments continue to and in aren't us three-year how the attributes dividend, and a close makes and economic going those and to opportunities also what actions on like That's the we communicating any job, do anything expansion what in consistently good cycles. our a need what's over we business, we cash are industry current to

together, last look we three described this we at deliver quarter. conversation expect important if to So we things back our

today, said, make that expected we just end million First, very realized challenging we we and top are year. would improvements, about expected the $XX on out to And we results deliver our half coming we cost back range pleased at EBITDA set significant profile good we in we that, and weeks $XX stage delivered to operating improving to reinforced the to of based the both progress, and of to report cost, we QX that that range of market highlighting that, a continue six a quarter. adjusted of In first the position, in ago, million. production flash for our the brief

Mississippi. outlined this we commissioned plant in terminal our new of Both track of remain production big these pellet Lucedale shipments production part and our a and Second, fully contracted the EBITDA ramp Pascagoula deepwater marine at increasing latter of year. newly part the are uplift projected and on the from in increasing

on major ground and also potentially of to to commence. finance capital sources and like site Epes starting is Well debt Epes contracted deliveries this. fully construction plant in construction equipment clearing, new talked our Alabama access prep beginning We about civil now plants with to our work, ability

our market capital the that our strategy we already permit We agreement, million giving midst tenor, have of similar and will inducement tax-exempt a a cost notes access issuance the received bond X% our for Mississippi. next have XX-year the for us we capital. $XXX at we application prior Mississippi with tap that the confidence for tax-exempt volatility, able be us in to also markets to able Bond a long-term structure reducing in attractively facility. for were That's when And pretty appropriate plant priced is air a some of filed replicable and significant inside market our Bond

contracts. very constructive do off-take pleased MOUs contracts, new industrial our Today, about add and that and of of range we Finally, executing the than existing did realize over converting with signing long-term in in that binding contracts expected as are that to What could described and announce contracts demand, that across new LOIs to progress exactly million increase we make, continue we the metric to not both XX range to broad more expect of to new years. quickly utility as ultimately five we pricing the four we expectations tons our a able portfolio, we set, to and duration substantial growing challenging from face to higher customer X and seeing supply is counterparts, have pay our with more been are that's current happening alternatives at willingness and cost we're who come the our market even important secure pass-through from the and as that increasing new an from are substitutes. environment, benefiting note escalation given today the tower that conditions to and within to It's given stable into have pricing time well pricing provisions, ability fuel as the which us. translating available same both permanent limited margin our we low down. improvements And carbon for contract overall prices

expected, consumable seeing leverage stand size cost we absorption are in with We period we not enhanced in advantage power existing from as within a improve we for taking financial contraction operational operating asset and that in trucking position our reduces as only and steel, unlocking tandem fixed find And of purchasing value production. but truly global we but goods, maintain labor, are increased ourselves And strengthen economic to and cost rates our should we not base. from also benefiting scale of only are expand results.

Focusing in on rest what XXXX. you expect for the of

the the is expect our earnings fourth You of year usually about typically will is the with year softest and previous two-thirds And both for our of the The be, in to quarter. of fourth typically what of first record quarter quarter the are back year our earnings. seasonally a first representing of quarter, our represents the terms one-third we margin per year. half seasonally of strongest EBITDA we setup from for recall discussions, ton. our And quarter half about thus that the

million XXXX to share, increase a the a XXXX. we the we growth further XXX is ESG capital adjusted return project especially to project XXth EBITDA that to that XX% of for our $XXX dividend path represents could of overtime, we yield Given shareholders this in million dividend the XXXX companies. $X.XX of XX% and Enviva our guidance see which S&P and $XXX XXXX uplift of and achieve a with million range $XXX company over to to a as further for in are the a XXXX of in range And trajectory of increasing range. guidance $XXX reaffirming clear percentile that rare backdrop, continue both a per over pure-play combination million a advantaged EBITDA are

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

business and virtually give Q&A our and to visible are us. financial to truly then of our an to and give well But unmatched terms Thomas, We contractual business asset some on Shai, come kick the update like flow remarkable highlights over cash market turn in of to in first to our the back fully nature I'll ahead expansion color our highly plans as discuss growth session. on important our off I'd it and of that the generates our growth as durable prospects contracted developments. to

ton, being the time incremental the premium in quarter Enviva's certain $XXX generated pump biomass good $XXX XXXX, we quarter ton substantial X% primarily the revenue net chains current escalators a pricing across $XXX of and address per Even basis. market this pricing weighted biomass thermal rescheduling well compared increase approximately to an exceeded the product gas back prices last as natural a second our but was elevated enables for pricing of crude quarter energy to that as in was into contracted customers second XXXX result as million by to margin plus of on for quarter coal, contract which for sales price contracting early Europe a EU of gross gross strong primarily all margin timing million, with loaded adjusted the did shipments. certainly carbon and of finished XXXX of recast along indices year-over-year double of help the ton pricing differential our metric and during $XX dislocations than represents exit The biomass in driven to recast to escalators economics revenue at of being We as Adjusted market coupled was of X% with prices spot $XX.X now quarter of by gross Thank requiring second metric are in due specific the per are supply periods, biomass second as adjusted price recast for Adjusted biomass represents to to our July, increase $XX.XX that current only a a not other compelling XXXX an environment shipments of able increased the second environment. in thus versus in of elevated the capture in late you, the and cheapest some the as second Pivoting $XX.X inventory per in pricing. John Biomass as per $XXX to of as compared a portfolio. tailwind market of morning contracted ability XXXX. indices biomass. of quarterly quarter ETS revenue well $XXX gross at today's XXXX, basis. deliveries The And June, of third deliveries we more to producers metric able generation increase margin long-term compared curve per of prices. a is customers were the Net which ton, the everyone. year, pushing second our form results, XX% two our ton higher-than-average tied future deliver to basis. few average metric for annual average an affordable ton certain increase on pricing, close XXXX metric were inflation deliveries quarter which quarter have Enviva into to providing, forward curve. by to million was other market quarter European the the price contracts as which per forward ships on simply driven margin with our roughly opposed roughly during XXXX. for million to to represents Recent with

on cash of continue pleased have recast to the we environment. in compared the flow compared securing a favorable the second end for contracting a a XXXX in of that as was driving we for of a $XX pricing of the the These addition of mentioned, of XXXX Distributable to second with expected quarter margin second material in go-forward as are $XX.X second quarter And million. was structure We $X.X durable on from are EBITDA for Net the tailwinds June, Adjusted a $XX our basis. of recast In are $XX.X pricing of the uplift recast be for $XX.X EBITDA quarter million market to expansion XXXX generated adjusted to million we high on contract million of the basis. million XXXX to $XX.X expect for for to quarter in $XX.X a very XXXX was quarter shared being the loss basis. second corresponding to quarter net loss range the for million that million second achieved basis. XXXX compared million John to XXXX range. as on quarter

Our which as of revolving was liquidity hand, credit million. cash Epes on on the June financing earmarked our availability facility of XX, and our included plant cash for $XXX XXXX,

we include end July. at of tax-exempt of the the received bonds, we quarter middle the liquidity does from proceeds in not the Our green the issued

to tax-exempt a recent We of bond Enviva bond the Epes, at period $XXX our which first challenging rate market volatility, build. bonds X% has with in time accessed our successfully municipal green we the Alabama are fund a capital of market. pleased raised represents plant prolonged Even XX-year million green issuance,

We financing municipal greenfield bond as attractive for an the provide expect option well. could projects that market future

the to John opportunity a a mentioned, portion for of Mississippi Bond on quarter consider XXXX, and XXXX back XX% tax-exempt our EBITDA. guidance we half our projecting our with has the reaffirmed the ranges be alone example, to are that today, back represent For generate press over bonds. XXXX, recently higher third release green are second than Based which to yesterday's endorsement Business approved XX% of what adjusted we record the the of year we full Finance year plant the us resolution at quarter of adjusted fourth projecting such expect build Corporation as to X/X crude of Stepping EBITDA and results financing adjusted EBITDA. know XXXX we with Mississippi in next provides look we the roughly fourth quarter in for and our strong quarter

a commitment times credit and X conservatively remains managing Our of leverage to to Enviva's sheet facility. balance ratio times unchanged on our we continue based to target X.X

below turn like range plan, we over Although, dividend it manage perspective, will I quarter over range times. With for XXXX, focus and as we of or we to to dividend coverage From coverage our particular the a achieving targeting that to the that, target X.X would we times that XXXX. Thomas. execute in a for term, long a exceed year robust are but that ratio to always expect so, growth and exit back full we year four we may

Chad and on progress. be It's market pleased to participating morning today's call, I'm exciting to good great share and and side Thanks, on developments both contracting our some everyone.

XX-year and natural MOU XXXX. using line also which XXX,XXX communications, replace not over these our now. term MOU start the into of are pace decarbonize start of their unprecedented contracts. volumes low-carbon several by our coal prior European of to period. supply we a with outlined to reliable but In Europe. an the next the a of contracts gas, right to a signed. seeing given lock expected operations, announced the the LOI we Initial to the binding with who month customers, urgency plan their four additions, year converted only is product with But conversions The agreements across to year feedstock, an customer, previously signing across used contracting Let's bring tons to operations, span metric in planned per of are including finish slate of shipments industrial our three of secure a is we Yesterday, we announced take-or-pay in new and we've over contract ramping approximately lignite the

from Carolina this of South Just the for contract additional Greenwood really volume plant, contracted represents our growth. nice context, so one slide annual a production

manufacturing second is the start back yesterday coming announced industrial The we approximately to in years expected with of for weeks. for intent deliveries contract of use to in in letter was with per XX green announced facilities. contract year, conversion we our the to heat the German that XX,XXX product intends a metric tons their May, process generate This customer

contract be to Under this reprice collaborate willing metric is to a market deliver supply are incremental perspective expect current customer announced we heating starting will a pellets The we conditions the thermal short customer of for XXX,XXX This capacity year. explore to the some These significant to a contract at under well feedstocks premium we repricing per historical value environment. additional an this in from contract large-scale as as our long-term agreement, incremental hard-to-abate improves weighted five existing at reflecting contract dramatically year of our secure final we upcoming produced for win-win to the to this volumes commit third our decarbonization in low-carbon note team today's customers largely on willing There and are market to agreement, customers industries. across that being our with all we new And to their to is existing tailwinds need with tons a EU-based tons pay, is This at incentivizing deliveries prices with to terms wanting customers expansions systems. metric customers are Southeast available structurally XXX,XXX production example Germany, important announced long-term, US. focused counterparty in used from our remaining fuel term, elevated enable customer. biomass. and and to It's executed a available expansions contract to keenly agreement and affordable, and contracting years, fourth for of our volumes are outcome. fossil supply our with is and fulfilling additions, around that limited utilities we specific expected sense capacity our average term consideration in options achieve are us and prices, incremental levels be portfolio long-standing agreed across make place alternatives on volumes a base, the later to The and commitment. and ability new to able a XXXX, to great given our strong our with in pricing and carbon through and remain fleet. long-term where contract prices with higher our delivered to of progress accelerate of secure, reflective volumes efforts In long more under our all current

to a market. updates the notable few Let's on turn now

for believe little our and the renewable announced the its help support we you contracts will the new establishes of with have will climate process many encouraged role know US US to their adopted is in not We of the XXXX. four net on zero to the support underscore account change only at for but for global it ambitious unit the rules the ago in one counterparties, legislative granular practices. emissions by common critical solution of climate sustainable bioenergy Less require the Getting renewable the of voted rules pathway European development renewable energy initiatives in sustainably Europe that recently for these Parliament is regulatory EU final as note which Fuel moment to of significant Currently, XX% Standard year which Sustainable bioenergy process Most ongoing biomass for essential directive remain to accounts a and energy updating of energy legislation Skies jet attracting the fuels. and across least European introduction least aviation confidence is exciting to with reach XX% achieving have support to headed. draft to a carbon consistent the sustainable world's industrial SAF adopt by more achieve As all almost economy the a requiring the an sectors such of by of at to be the the Renewable is goals. airlines aviation contracts mandate in used a energy customers EU's European as bold fuel are XXXX. SAF and produced targets EU XX% just as also with that goals. Similarly, ultimately the verticals fuel key of I'll direction and key continue announced a to of is XXXX. UK a Act ReFuelEU, that policy the change scale than the legislation Enviva's climate the

flying. process one Europe current change large-scale, capacity, support Enviva transportation fuels, and fuels XXXX in important and progressing with who low-carbon Energy here to Democrats is the production SAF. I'll on was commence Taiwan's week biodiesel, the biodiesel the in XX% off. includes just regulatory nearing the sales Agency's to to into scaling by a back certainly can International began the electricity Taipei, that investment to to is SAF aviation company John, inflection I and to And It Taiwan. US this update plans as currently And customer last World biomass are feedstock year respectively. turn product was approximately with XX% large of to the the the an US, the of and in biomass plans point, in to announced biofuels of renewable increasing and apology a Additionally, the expected decarbonization a relating energy government's amount Energy for co-bid in X.X report the X Outlook biofuel is order to our tax plant agreements new it carbon Senate approximately roughly a of before XXXX XXXX metric Taiwanese X,XXX a notes gigawatt struck The and and meet Power, in the making in coupled refining state-owned wood well We production XXXX we're of two unit to give about of transportation fuel which presence to annually. a one last carbon proven, and up play biomethanol objectives, of renewable low the Recently demand incentive. that million Tai of whereby after the around account of produce paying footprint fundamentally generation. is we're in for build have total in energy, million scheduled XXXX XXXX, we around progress, into tons that positioned the credit convert time project which symptom we translates biomass hours operations quick role deal of power

scale back size, John. turn the that to chain. into it in supply I'll be with, Enviva's Given market, biomass Tai record, we deliveries to Asian an and with expect track And partner Power's important

Thanks, Thomas.

underwriting hard-to-abate supply, And the contracting, range the unprecedented has turn in more Enviva of use opportunities the increasing from is structurally of for pace thus persistently counterparties has displacement fuel-based built. generation contracts renewable of new As strong. a to in expansions. contracting been industry, our must capacity capacity acceleration new of never mean is never our Because in this highlighted, has carbon, get short this cases, high-quality pace Thomas of and across been market robust industries, with the fossil energy

to plant is and in X.X permitted in to fully industrial Alabama. annualized mentioned approximately once is EBITDA world. $XX per Epes, and million we produce ramped. designed wood expected largest generate the construction of plant in Epes is recently I production This earlier, the year, fully As metric be commenced adjusted plant, will contracted million, the plant pellet our tons

for Bond, We for of as expect gives also making plans swift adjusted in nameplate similar us growing the in facility, to our is ramps third step-up to Bond's be in and fourth size to Epes Pascagoula expect our in of conviction second the Epes Bond and projected to its plants underway Epes plant. back XXXX, significant to in date Epes completion half and we with our for capacity. the We're designed the begin on to construction complete EBITDA our cluster construction in are our in start XXXX. early and planned of middle of Mississippi. progress XXXX, which cluster's the XXXX, plants, plans are construction

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

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

an for recently filed plant. we have of North expansion a Additionally, Ahoskie, for permit accretive our Carolina

We are planning by the Ahoskie to increase XX% permits. subject receiving to necessary capacity at

continue in our series cluster, clusters. plan our of addition the our are new likelihood three And Bond with We after next the in our to first expect years, the over Pascagoula plants growth six and six. of next add is across the add that to plants plant three on we'll Chesapeake Wilmington more five fourth that. new Savannah, Epes and the

quick call the for morning. this open discussed we what a Before recap give questions, we've I'll of

the quarter to second are the first of that over time. proving report, pleased at delivered the for experienced expectations of or of Enviva many results XXXX. I'm And of short-term end either First, we our half top in the the transitory year, challenges manageable

tons. year, Second, metric be to in deliver adjusted XXXX our of a the the and record terms both strong with back adjusted guidance fourth gross range and margin EBITDA projected of quarter per we half a reaffirmed expect to

contracting drive CAGR company to in the the an expect contracting our us. The track day-out we're LOI here's finally, and reflect the binding capacity what can of next an underwriting XXXX is as the of effort day-in to and In the from XXXX are we successfully, look next over contracts, conversion And EBITDA is including over in. forth is XX% the adjusted which and of close putting success years. expansions, series an out new XXXX. Third, strong remarkable doubling on you and which contracts, team to term, MOU our four we're we announced five production of through our size near we pricing projecting environment will

of of First, and QX. enable nears ramp benefits QX step-up $XXX Along ramp, forward our will year that quarter within realize, of our significant that Epes, to volumes from we the will progress begins strong our for us and pressures to pricing out beginning the site as continue year. cost it we deliver a completion plant over contracted Lucedale, ton, margin higher design the to produced reporting completion around million. with produced record its expect EBITDA that in fully will QX, production announce in $XXX out we the we terms there, to adjusted way, a the the permitting of on look to per to the million at as And expected range both and follow. post a new we Bond final ground of cluster, combined end the plant headline construction for mitigate expect to the From a closing to and come and of also for are to new Pascagoula volume the

the long-term and can you in. environment our expect new we're to into opportunities parallel, pipeline strong binding to the in in continue us to capture course, value contracts of Of convert sales pricing MOUs

a lot We to more exactly sources and to have but and company the saying, scale. continue what opportunity started. wants and are fond to, of ahead more we're at world work to build change of platform The from that climate quickly delivers secure a getting we look of forward A today effectively, carbon, to incredibly privileged less cost real a unique I'm as offer. just and us, lot that's benefits

for call the up open questions. let's Now,

you. Thank

Truist will Levy The first go question [Operator We question-and-answer Please, from Jordan begin Securities. ahead. from session. comes now the Instructions]

and the and side Maybe financial this contract the morning, start cluster. and touched to on on. conversion some prepared the in Good on of announcements his all, But congratulations in so Shai the on remarks.

the the stands up You've But our we of plan. benefits who and speed more demand the overall are growth got investors growth plan just impressive company. on the and get the of around the discussions, questions new a of the are story lot of in history to clear. where pretty In dividend the to the environment context getting

to value dividend the that on your of So, the that if size of and I updated we plan sort wanted thing? thoughts the growth maintaining course just see the of throughout could get and

each new we of investment these drives, a to forward. encouraged our very executions. the connect but very is also not EBITDA in Because Jordan, thank continued recent the measuring growth of an CAGR historical you. new which we're really always question. business. at obviously attractive really important appreciate contract long-term only contracts the good fully what see asset and click-off contracted very, course, by underpins year-over-year It's going This multiples, And our

you a If north that's XX%. the do bit about of little math

we grow for And when of moved and of and really And as part stable as growth this the dividend opportunity opportunity into in to gives into flat our and associated we so, the us over as the we a partnership to as at of be going acceleration our growth if to capital very conversion growth managed single over to but return of But as we're the year plan that of a maintain in is described, leverage And and were from for our We've master a cash keen us the we one That transition and capital we XXXX. IPO initiating confident profile, focus moved certainly that guide XXXX to time. -- year. XXXX $X.XX our look that conservative course, you it, at with a of with return durable look overall dividend that business XXXX really the since this for we grow of guide simplification flow in quarter $X.XXX profile the mindful grow a I it we've commitment durable stable course transition transaction commitment as with out-year growth continue of always year limited full time. the was dividend. a And the we to that the think increases a time. transaction every feel that increase XXXX, model. being into over represents Certainly, very out of flattened self-funded partnership. that and

a into Thanks operational that, the John. side. maybe as And follow-up jump for

on contracting momentum as before projects to committed always just the you've moving mentioned you You've fully seen side. out them. the positive with Clearly, forward been demand

today of see the wanted So, and overall I of in confidence be you plan line greenfield sight projects fully just next stands where fully years? growth with to over the along could or terms the of on try gauge the expansion your that today and all contracted currently as few extent it contracting

Yes.

a our We've a deviated and dirt, shovel we rule company. it contracting and base the never we we golden ever turn fully Jordan, plan to We've for certainly since done asset it's of this company. know now. don't before founded you As

certainly contracted. Epes we talk in construction the next the in when Bond year -- about being fully at fully beginning facility So, being Epes contracted. The of construction,

announce around ability well. that of Our the plant that the and year, cluster time the as around to fully we Pascagoula contracted the to end expect fourth be

contract expansion facility. -- Of announced also XX-plus of produce believe our possibly the the given right in and have XX today, that maturity do given Great average fully every years We just backlog course, for homes of an the can for Husky we ton overall course, single we also contract next of contracted. weighted that pellets code. we

to a be and environment, fully directly asset adjusted committed current annualized in reinvested the long-term the stably and pricing shareholders. seeing the provide ton. So, that translates in And AGM of we're can base. And contracting flow and for cash uplift expansions obviously, opportunities that material EBITDA per our margin business return in into to course,

Really encouraging. Thanks John.

Thanks Jordan.

from comes question with line Please next ahead. Goldman of The the John you. Thank Mackay go Sachs.

start the I time. everyone. Hi, side. good the to on wanted morning cost for Thanks

a the Can But talk one-offs momentum how And and should a into you quarter kind talked little through the ton higher about we those. into basis. per Anything and quantify? little a you trending on costs the think can year about least seeing rest you're what some of XXXX? getting looks of there? bit eventually few about it in first was at guys in like second You a quarter

to good John with Yeah talked phone talk the inventory we to a last on we when you were balances. again. together exit as The relatively we QX did high --

mentioned of that June also a in Shai a we inventory the ships. higher in bit the move his seeing the you're to given ended remarks, as through quarter. number XXth And with from So quarter about Xnd essentially July of flow

well absenteeism, really obviously when the don't those Naturally you talked about and in that So issues behind impacts COVID benefit are firmly of the QX reductions QX we're being get in about you talk we cost seeing is about What what rearview a related we're is of those full mirror in there. we along that manageable pleased of look production on the that. planned us the then spike an saw in And way. number as you saw good productivity, both curve diesel we, a our the describe course, declining that of pretty you a forward fixed increase time more is Certainly profile the as curve. ones and diesel the assets. is and cost that example as QX absorption at overall in if over of transitory

certainly we're in we we exposure where see And workforce. our given by about how really talk But that. also encouraged is that. So manage we logging

meaning effective are quantity. the is what the rights the to from means transitory have as well in exposure month buying like curve but bringing forward that loggers a lower QX, one miles we've to of more our further particular harvest that to Tuesday our tracks, manage procurement much logging closer at which price in, on much to migrate meaning loggers timber quantity been that fiber exposure a to workforce the And manage low-grade those higher only tracks, more And Wednesday on is to on softest our the tracks so they a month. diesel and not Difficult as we road quarter to our over benefit so transporting able are do lower quarter that in as seasonally frankly plants basis, rates, where QX. on is described to

You think for to as our another on woods processing have own diesel of further we opposed logging can chipping using step chippers about actually of how take electric do the powered site the fiber your equipment. in and much partners you instance some where

of and mitigate exposure manage And so diesel. your that change something and you can mix quantities like to

we're So quarter-over-quarter. pleased the overall cost actually quite in

profile. business. volumes QX getting But of really of XXXX significant of a and of like gave and And as obviously X:X that our back cost full the in pricing going That's this actually because get sorry We the year a beyond. XXXX reductions clearly The as of out and remarkable guide delivered increases XXXX benefit back earlier expecting but in in we year we're what continued pricing is quite with long-term the consistent durable what see won't the until a just into quarter the be get that that the historical you year the to the kind see looks we half pretty of XXXX, for really driving QX to and I'm this record the of certainly terms to realized generation QX the in -- of importantly year you're pricing, year are again engineering, the not we're is to You beyond. that only back uplift margins. into expanding year. half EBITDA half of uplift,

think what to, to can back higher you Thanks. in quantify trying levels might get you XXXX just is? fourth if COGS again, about from ton carryover once let's inventory that? Okay. be say to impact I'm your COGS you curious the overall, the able Just to like on let's pointed say, quarter per if

of it as think ton, more per look and there I in to on a be be opposed more an uncertainty to should we the COGS would and much we margin look, continues we market this focus on terms absolute volatility -- clear level. at in

of we places modestly be the course, overall of a will, by ramp blurred that continue within like as of assets to build Lucedale, Some portfolio.

the sort negative pressure COGS simply earlier absorption in lower ramp. on of see of You'll production cost fixed because

that because on see numbers on achievable steady-state to -- noise see So What an to But you per you're to a rate XXXX believe increase run going it's bringing there's no of aren't ton basis, will system, year-over-year. plants the a is in continuing online. margin on absolute basis reason basis.

one fair. squeeze If just I related Okay. That's one absolutely can in.

guys you going much you forward? realizations, were on perspective? can just margins how quarter have talk maybe or the margin up capture pricing of some availability this Thanks. just able about tonnage of year higher you spot And terms -- to moving much to a in this do from that how sorry, Just

little QX. it actually Yes, was in very

As both Shai was shipments. few a and in Thomas the remarks, it have described prepared

modest. So, very, very

it All time. the for right. That's Thanks me. it. Okay. Appreciate for

Thanks, John.

you. Thank

of Next Elvira comes Scotto Please from Markets. the go line question RBC ahead. with Capital

Hey, everyone. morning good

and I year. So MOUs. you're nicely for you're like the years. yourself to the guidance making wanted But And looks coming it decent the touch setting progress here this contracts on some up for on

you being to But $XXX for adjusted account into walk get don't EBITDA reaffirmed you've XX% comments to the you guidance I total of take representing that through XX% $XXX XQ can -- when for and the about year. million higher EBITDA. the made million XQ your guidance the guidance. me really So the than XQ I about

So walk through me can that? you

Sure, Elvira.

-- that think I question. you thank for the

kind of the the as that indication volume to year, QX using expecting of big year more XX% we we're step-up. of then of compared We quarter getting of two-thirds big I EBITDA the year. the adjusted The contracts, second the an mentioned And think is as generate the beginning it will full from shape well be higher plant year, remind schedule. much step shipping getting to QX you of over of QX, half -- from our again, expected strongest giving over QX. we as like of are we're in again, a describe kind expect like we that's ramp-up Lucedale the prices as our the the of can benefits said to percentage how before year a for what the we as an our about the of second a half more the indication

of we This year. our XX% two-thirds is So be all the the ratio QX about overall EBITDA adjusted to do one-third. to with consistent expect for of

are no with million all seeing we are from still within the like of we million. then that what of range $XXX And deviation to $XXX So that.

Okay.

think that of Okay. also bit, little know Because inventory, That's working could it appears reverse? capital. capital the on cash to touched you Can some around provide know but I that mentioned affected, around your a to drag detail I timing working more flow? when just this be you helpful. but some decent and shipments expect you on I you details? some

Sure.

a think I question. good that's

So and of expected the in sales that, our relatively month what large volume up have during we of we all quarter is the June. second

like So, will otherwise would ratable, you it wasn't think. maybe

As balance. a result, a AR ended up we with very large

July. working That's our at for about of overall. So ships quarter another mentioned, by we Also, beginning the like capital in of slipped the kind million. million AR increased two as John about increase $XX $XX

for of and of between million. Just now inventories AR about all that the $XX collected. our increase marketable AR for we experienced and What in is we quarter, we've seen

So, of kind of component normal. with to expecting course to back like return no there is and issue the capital AR, we're that of working

the capital flow to generate throughout expect from year. do we of rest the working cash So

then Okay. the just question last ahead. go – And Great.

late the end assets high you've we in talk of to see of ramp to significant because John. want to we the yet way. aspect that is, is – to weight just Good the you drives you I – or volume of end of range. again really didn't But Elvira, And around cover portfolio low by quarter. of – a is hitting – that opportunity really in connect got on kind one because production what relative Lucedale come earlier what of the missed basis back a QX. your the this sorry, I'm and around, guidance the to The question the

And that, entered be what really number hits higher-priced ultimately really well the the the new And important a contract driver. then many shipping those sail to is mix the of we've contracts a QX, especially going given now, right finalizing schedule – versus we're so in as given QX of as re-pricings, in how vessels QX versus QX that into.

to be And so and weeks, certainly over right right schedules which mapping otherwise now, is why little the now. comes bit relief several than great continues we'd quarter. wider That the obviously expect the next those a during we're into shipping range

a tighter earnings so November to much be in to provide get the position a And we'll call. guide as we

quantify – uplift higher provide volume from the And then, comes if what – kind Great. volumes could if EBITDA I what this, – was incremental Okay. you from can you versus wondering have pricing? on you of

Over what period of time, Elvira?

mean, those about yeah. Well, because years? in talking XXXX you're those XXXX, step-ups I and in I then big guess

Yeah.

from volumetrically coming uplift Obviously, but XXXX. you've of online So a higher the facility, let's walk Epes pretty right? So back XXXX benefit significant right, driven, in the in prices too, higher largely XXXX. at volumes got

going million per AGM largest if the pretty plant, obviously that benefit XXXX, large the you the in a to adjusted $XX but million in perspective. of that's tons of annualized very of X.X do get you're not implied a So, EBITDA, full sort healthy ton and equivalents EBITDA

So there it you've at got pretty the end online as I'm – QX comes important, sorry Epes, QX XXXX. of

important some got pricing. step-ups you've XXXX, in then so in And

You've got basis benefit see year and a in Lucedale on you pricing the escalators that and repricing of full our the the contracts. volumes,

metric to price So step and in and again in per to of, the in you've what AGM got really XXXX. important ton margin and expansion, volume historic volume north of $XX up to, terms guided we've price mid-XXs, previously XXXX relative our in

Thank very you much.

you. to speaking Great Absolutely.

you. Thank

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

the questions. Thanks for taking

proposal? proposal, the are the You on European that Parliamentary we should to restrict earlier. next from on of that on expect? touched what If nuances steps zoom Committee latest What's regulatory Union mix. some the biomass primary in And we energy this the

And tranche who just regulatory customers, metric, domestically I'll contracts, These this again prices, new customers. to European European over the -- higher regulatory a let continues regulation any Thomas, you. the we to volumes. terms look all in to whether know, The the associated our whole risk change for potential to in and quarter, as and actually it's or with the evolve, bear Pavel, longer in certainly regulatory behavior But with most the contracts. talk internationally, as Yes, of more up important we you continue with signed of environment at great they announced a environment are is speak and second.

by And so of travel the convicted environment. very for we're the direction regulatory

to Thomas, you've you process, met too. before and turn me and go unfold ahead, to the know think continues answer the how might this we Let about

again. good HI, to speak Pavel, to you

we'll past, this both Union, the So the all working votes agree regulatory of September related confident European to we to both that a the than stakeholders very be On biomass. the course seen all of what that at and since on are the qualify, deliver compromise, qualified where final parties have vote had we that, and an outlier, outlined the very come and clearly is a I will process we that to and resolution we the have we've the have are in in favorable are Commission, have you've to who much that biomass ultimately first positive the will more of will sustainable pro as plenary conclusion, mean, like, Enviva. where top Council

just broader compromise, context of and And tell Commission the closer sustainability much the in And to the particularly so as I about you, will it's than crisis alternatives the Europe, final the only Council about It's crisis. their not energy seen important. through Europe, And any because to continues gas past. the the noise, proposed you that they go, you have should of low-carbon that anymore, Ukrainian security. alternatives, in exclude about as be energy much what some we've be wherever when think rather that knows very of cannot

And not and half an that first the to of find will XXXX. resolution, we're once in so very confident I'm overall pragmatism And included. from a very process going positive over is perspective, just be reality biomass this

on world. up other side the follow of me Let the

product have in You've still or of that West decade. all, number that to the the first this going case? In Coast Japan, by talked about, North two, And appetite America maybe your half market? on to sales the of serve of the -- capacity you interest Japanese middle production developing will of is

is of volumes Pavel. contracted about question, what XX% forward go book certainly contract Europe. -- go Super would The Asia tell and XX% our that into you existing about into our

Asia. to pricing in price delivered environment access Given marginal even the both for being And power pressure us set. course Europe. of see pressure accelerating just LNG, and Japan upward predicted customer I commodity for constructive an think be importantly far that LNG Europe pricing and that of honest increasingly in means that question environment pay what frankly like the implied pricing willingness EU the environment places certainly jurisdictions. on Clearly, ETS is as in on where carbon plus behind. globally pricing European we on that that in basis doesn't mean in currently a Asia and contracting, delivered should ability set sector we elsewhere that a the energy is for we carbon and forward cost lag in But customers on where of security But exceeds the that the we a the other that in at see all the face European had

that aviation doesn't bit we've California in although that over or and things the for may as somewhere mean and in stack there will of longer favorably, California jurisdictions. in lots so factors. generally contracting export European an time a US. rack They a different time in while capacity sustainable be fuel California the and do be And period That up. as in out in the talked production more From difficult-to-abate the accelerates of it Asian a to more market basis, little catches greater about opportunities our of continue likely that's period rate we like pencil where opportunities don't Southeast else context, a never staying

guys. much very Thanks

you. Pavel, great to talk to

turn you. to concludes Keppler, question-and-answer session. Thank conference remarks. the back CEO and over Chairman any would John for This like to our I closing

months setting again, stronger Obviously, not stage a XXXX if we're very for getting on And QX set and an our everyone the believe Talk soon. couple half even before. again, a together forward we XXXX. time look year you in thanks back the and Well, to for up for for call. today. the We'll just thank important back of us of joining

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

now may You disconnect.