Enviva (EVVAQ) 3 Nov 222022 Q3 Earnings call transcript

Good morning. And welcome to Enviva Inc.'s Third Quarter of 2022 Earnings Conference Call [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Kate Walsh, Vice President of Investor Relations. Please go ahead.

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

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

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

In to our financial comparable and accordance forecast. the these be financial will as in addition reporting earnings as to we measures measures relevant measures directly well reconciliations release. discussing EBITDA is non-GAAP other other included concerning periods certain non-GAAP disclosures our presenting to with their also completed adjusted most Information GAAP, pertaining GAAP of results and in our

reference historical document on basis to accordance with recast reflect recast on on XXXX, can depending earnings important found presentation. XX-Q recent Transaction as were which is announced discuss October and we reconciliations transaction. our contain on point. non-recast basis, a or for that result be recast financial Please financial refer Web the envivabiomass.com. most more our on we to presentation, Form recast we release release will the results investor a to SEC non and use that earnings XX, historical and in financial Today, Simplification a GAAP note results required Our reports, of non-GAAP site we our to measures XXXX details of It our at

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

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

in the the in saw outlined October. EBITDA results we quarter third financial in delivered substantially with by In step-up for line of increasing third you was our release, quarter. XXXX, expectations particular, over for early As significant earnings over a last quarter, we XX% adjusted the

years. of our high rare contract that of to we combination is a we This expect revenue also backlog with our achieved to million. fourth EBITDA results like quarter. And over results share. represents we with also adjusted that of because which visible, range. a year remaining another a $XXX increase the cash record margin midpoint of fully approximately our contracts a ton, are $XX to few very XXXX, full step-up quarter over weighted share year $XX XX% XX are the be There roughly of long a $X.XX guidance a in second per a metric We durable, a approximately to Based with means payer. asset the our million for describe, declared flows quarter We contracted last us in guidance gross per base strong heard $XXX on long contracted third per full across the you've take-or-pay underpinned line reaffirmed contracted term of it company dividend average $XXX of and and $X.XXX fully companies XXXX significant metric are for guidance adjusted a seeing we business believe of term by be dividend dividend operational deliver strong are at growth improvements to able and on per term continued billion stable adjusted the year million ton, EBITDA our half we ours, seasonally strong track and with

look we to into our a the really we're starting year conversion to anniversary from one we way and are an up As of as due regular C XXXX, coming on our Corp. a corporation, strides MLP

We XXXX times be at per $XXX $XXX forecasting dividend the currently range. of of our at which million the in are range adjusted to of for $X.XX EBITDA million, current cover will this midpoint share to stable X.X

complete of industries term recessionary despite a for with cash new And energy new and based customer rates, from we generation quality to back an to fossil that inflationary our in alternatives contracts, of benefit customers. the fuels across hydrocarbons support cases be decarbonization our the early are opportunities year. broader to terminal petroleum of absorption. for high of to when The accelerate. X hard to steel, even improved more increased market drives us. the new This productivity with demonstrating potential fuel, shipping and expect and the pressures. fixed range metric availability remarkable to well than in wide the environment refine the and displacement escalators schedules however, guidance and energy of the cost next to level long I And positioned with million of and use robust our renewable produce environment constructive such continue expansions will is and with in combined sustainable our contracting we that demand solutions What can continues volume continues and benefit existing like come cycle aviation XXXX growth pricing abate year fulsome manufacturing you in our We facilities cement for asset now, and as we volatility, with drop heat flow throughput market counterparties budget tell production multi-plant tons within and magnitude a

X year sources. demonstrates additional how million close contracted our an energy believe X.X and per existing to metric both we agreements track announced demand. trusted tons ensuring to And of new long This counterparties have from customers. renewable metric incremental million serious and are per we with on term up new year feedstocks Year-to-date, tons secure, of announce we sustainable are new

on Meth, years almost proposition. ago. with a of our on recently has customers US strong, quality, relationships Thomas who critical delivering Co-Founder Web spend on information longstanding our President and based business updated want as moments ESG me, important purpose driven the with value built a our leader value core worldwide. content a our we're few dependability And products have we've site Enviva with now I sustainability We the it been XX our practices sustainability Southeast. and and in founding thought to the of merchandising Enviva's of and the since understand is sustainability harvesting

inventory as the pulp then grow sourcing XXXX. circular both area for regrow building Enviva well healthy value back abundant built them, storage to by their trees, plants. have economy, begin now are as pellets cycle high sawtimber, and forest growing each year and for where here healthy US supplier largest value care more percentage The and sided forest timber their forests wood where products forest We bioenergy in harvest the lower has with furniture, the we stocks. landowners and in harvested is even the of carbon and what is year growing paper, only small and products areas world's why for timberlands in grown produced XX% of every because again, large permanent This region's thriving, like a our single Southeast sustainably have since

like along and Day process There the we to our important and here And of I'd an you session. work, to leading the Southeast. we and in help help responsible told at tours many are how at discussion developments, to come we're our planning it priorities. and I before change I'll sustainability as highlights stakeholders Enviva's is out truly in sustainability the a number and continuing these providing source fiber details stocks how our strong investors site well our leading well how our such forward discussion and story policy. to industry discuss dynamics back US exactly a of look transparency to contribute we climate tours, execute But forest upcoming be our Shai growing benefits. give kick about how our turn about Q&A events have forest of then and off to as as our and to healthy to incremental about over where understand discuss with Investor supply and sustainability unpack market seeing Thomas we and priorities, financial forest some contractual as round on management, to color that, to to on important practices sourcing

to and you, left morning, Thank everyone. by on up start good I'd sustainability. John John, like off where picking

producing at that particularly the This European an clearly is forest net wood Panel improved a Counsel, authority were sustained balance biomass world zero forests climate to maintaining management or and and IPCC United change forest change them, climate from how much managed sustained the in annual leading climate stating critical the use Commission, pathway working yield will is and carbon the on in fiber carbon scientists from displacement than largest mitigation. Change, and issued from in from XXX of critical that light forest while of mitigation are for managed around paramount mitigating with Nations the role stating, sustainably right the increasing generated public united The Climate forests science, critical line forest energy sustainably of a untouched forest can a of highlighted Parliament importance. and scientists woody notes President benefit is the to letter Forests aimed to COX stocks, the recently fossil the play as from and provide life generate neutral climate a forest of better health the forests. products change. timber, in Intergovernmental we carbon sustainable strategy

our and of wood At and with into and the our objectives to beyond transparency to developed IPCC's the the & leading program Enviva, views. practices and sustainability go tracking provide sourcing we above Trace leading scientific practices align Track and our

tells merchandising that procured of when across wood our on & a For the the XX% half wood XX% us average, approximately we we take percentage on Enviva's was second harvested final data areas. fiber from our average from site. XXXX, that Track a Meaning procurement of Trace procured harvest

pulp applications lowest means the and and this we to majority typically harvest building ton that the paper. products, per landowner, the revenue the into provide Given furniture was sold like of

Our of procured acres data you we will Track less wood. tell of XX% also the that took XX% from we wood & procured Trace where the or

economic hurricane acres, a wood the harvest damage, of such for that multistage harvested was sourcing We as and also in conditions. we There wood. XX.X% case than market XX% good ecological and described a cases, predominantly reasons when took of soil from those pulpwood or more are of merchandised of percentage in harvesting higher-than-average the because

best the why grow land, against are we've products is forest a continues conversion inventory to that defense regions. critical nonforest As procurement markets our reason before, said for forest and to in

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

of near in know, the Union encouraged and which of a climate remain and long change term are solution the Directive the bioenergy in the energy almost you Europe, existing the legislation are contracts in where same ultimately within legislative the with of drive believe contracts, And term tenor to we other don't of durable our accounts term updating addition the is practices. unabated. remains the component term. dislocations contracting many essential As are accretive the continue the and longer will as Enviva's continuous they support drive transactions And role tailwinds profile activities, business in value final although and we near that opportunities that our legislation. XX% will managing reflect European term Renewable We customers. will of Currently, customers' headed. new the driving with of over opportunities process our key new renewable with sustainable long to compatible the bioenergy process the European is demand term highly same our long demand continue for and Energy used direction are a to

of our see are encouraged momentum the to there. direction and Taiwan and positive continue discussions also pace with and Japan in We very

supply to as important for grow industrial provide to Pacific we're profitable terms basin, sales continue party supply opportunities for the expected third Rim us. In wood purchase global of seeing pellets, which an and is

per ton $XXX purchased data market demonstrated on into them Market Rim Enviva Pacific in of suggests prices metric north record data than FOB volumes can selling long be spot that from basis contracts. our an volumes a suppliers in markets. less the and also currently to and procuring has track trading Market in $XXX profitably European ton. for term geographies opportunities per of points metric different

may scale large incremental the dislocations to market discussions, a drive us while these that an the customers. Act with a with and Reduction scale value large with truly has over of which about emerging conversations as needs frequently carbon of tailwind And For our provide decarbonizing that and future. Shai. market of sustainable is to we to is it in This storage, companies And bioenergy the aviation needle strengthening enhanced many move is The I'll US, like momentum [emission] IRA biofuel negative market portfolios Enviva, of turn with out our where our power more meeting behind bring types in to producers. for customers solution its using the support sectors the shipping to home talk that, also the I'll capture our Inflation opportunity round the partners, can back economy. fuel

were spot premium Enviva's represents portfolio, to biomass $XXX curve which term across third of exceeded at forward average current of the pricing during to Recent including as as existing contracted market generated you, a quarter as differential some weighted approximately capture a prices the fuel well price and European on Thank existing at compared we other year, than the now to indices biomass and coal, in metric in the contracts deliveries the only prices. pass increase generation XX% of new quarter of of customers turn addressing our bunker elevated number adjustments contracts mechanism million compared per Net producers' and supply by throughs enable contracts, $XXX prices which of revenue pricing than natural have long and XXXX. all biomass escalators a for result certain for inclusive basis. in morning, ton, of substantial this that able into sales net several energy cheapest EU-ETS We $XXX versus of with Pricing and nonrecord and double of but chains, and repricing to cost spot average true last time Even entering the third being XXXX biomass revenue an forward factors, biomass driven our primarily as historical of higher pricing. is spot in price. a dislocation thermal incremental pricing along affordable with Europe prices market today's everyone. form XXXX more market carbon record Thomas, by gas our curve. year-over-year, is not the third increased in plus crude quarter This more million per good

price for to basis, quarter results, increase with third by adjusted and to XXXX. pre-shipment for gross the shipments XXXX. margin with gross compared prices. million adjusted was back Adjusted due $XX.XX inflation ton The recast represents the than and by compared simply ton, an and compared increase third margin of metric of and a quarter margin we basis as as gross was margin product at metric the that was XXX% of compared $XX approximately of a metric the per of the coupled finished ability $XX represents third to of nonrecast deliver where to gross which for market nonrecast an as million, our compared quarter of tight in on XXX% XXXX [Reverting] exited the as the of timing ton per an approximately as indices quarterly $XX volume our increase increase to of of XX% escalators which basis ton. John caused by $XX few repricing XXXX the $XX.XX the our Ian. to a third quarter XXXX to increased legacy for recast we XX% higher an metric on driven of quarter primarily increase average million contract basis delays per are to did inventory gross This mentioned, exit the per inventory, Adjusted finished Hurricane

very being favorable a addition We are in to securing a uplift in structure contract pricing from material durable contracting environment. our

Adjusted on million the third pleased as basis the range XXXX nonrecast adjusted with of on quarter million to as the the third with to DCF line for third million EBITDA Distributable DCF third in net a XXXX positive EBITDA the million XXXX compared we on $XX.X compared loss corresponding for third loss that $XX.X recast due was 'XX we adjusted the XXXX quarter was of to $XX.X and basis. respectively. and $XX quarter be $XX.X are about respectively. quarter to Net recast quarter $XX.X for of $XX.X be cash million, a In of flow to of of $X of $XX million million nonrecast XXXX with million and quarter XXXX, on $XX.X third of the expected in guidance market that for million quarter Hurricane range to basis million slight even and a a the a recast negative October, we a for that for the shared deferral million EBITDA Ian. of in of basis, compared $X.X was in to for

adjusted liquidity XXXX, cash million. was hand, for availability facility back reaffirmed the financing on credit Our our Epes XX% strong EBITDA. our look and XX, in of to plan Stepping our to of under which September fourth yesterday's generate expect quarter full cash $XXX guidance year a revolving press adjusted included XXXX, as range earmarked release EBITDA of and at we our over XXXX

end a For million now range, range to slightly, $XXX million of $XXX narrowed $XX expenditure $XXX to million be from previous million. our the range we million guidance of range that the high capital dropping by $XXX to

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

so, dividend a for to ratio plan, manage the that dividend achieving for to we at targeting may trend. times. of coverage that X exceed From that we range XXXX. long over year And full we year X.X or back particular or expect robust quarter Although, we perspective, and below expect term, coverage as focus a are target to the we in XXXX, growth a we exit execute times, our

we execute five us. alternatives As to financing plan available to years, growth plants our we'll next the evaluate six over continuously of building four

we to Although finance municipal have us available number believe growth we our a to could strategy. is capital market, volatile, continue to of markets option the One of financing. the portion which debt alternatives remain provide attractive bond

the us endorsement with approved Corporation of to Finance Mississippi portion opportunity green provides the example, financing plant an resolution, with Mississippi next is For exempt in tax which our already Business Bond, consider a built bonds.

Given our energy Traditional [plant] evaluation potentially alternative like it now turn EPC would to fully our John. of another [Indiscernible] self presents addition to contracted infrastructure [Indiscernible]. proven model. that, alternatives new With project construction execution financing attractive back I finance in for to and

our Thanks, is, about [supply], fully capacity structurally point means is Shai. industry new turn, in on this pace contracting Building capacity remarkable capacity must our contracted new because underwriting growth persistently large last contracts Shai's built. thus, get expansions. plans, short our scale of signing And

plant the plant progress underway Bond our be the and the Epes cluster's necessary our construction We're Mississippi. for we facility, year construction Epes Epes, construction plant. making in fourth are to production Alabama. expect our to XXXX, As Bond permits are middle with Pascagoula subject completion of our industrial for third size on discussed, designed begin underway is produce plants in metric plans receipt of in in per plant to early we and the Bond, cluster, wood in to start the and with designed date similar to planned growing world. will pellet are second of tons be plans XXXX. the also we've the our permitted largest and of to Epes in and million X.X is and

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

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

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

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

a our First, results on with Enviva of strong quarter. and delivered deliver for expectations line the XXXX, in quarter we're third track fourth to

EBITDA $XXX million range our reaffirmed we Second, XXXX. year $XXX full XXXX guidance to for and million between generate and expect adjusted

of dividend year continue importantly, full per declared the And to helping us for $X.XX how many finally ahead. quarter share. US operations sustainable without in out, dividend started. Enviva is lot on tremendous benefits on we very share I day the focus change $X.XXX of a and I'm I'm team be a XXXX safe, that see look most described of deliver acknowledge a Q&A., and we third know, and we Third, thriving up call guidance we putting a company in, moment opportunities work for And we of the of you reliable effort reaffirmed of open our per saying, getting Enviva, critical today. to [Indiscernible] ensuring proud as distraction to quite part day team forests continued, the sustainability fond the continue of story take to we're our the the deliver the but before Southeast. to. want forward ahead in just that to to our have lot A climate

line Now for let's the questions. open up

[Operator question Securities. Jordan first Truist Levy Today's comes Instructions] with from

update. the Thanks for

related hurricane could that First, opportunities as if delays to I see market of we some quarter. that I the for spot there's you discussed. and recognize try well reconcile as shipment the want some some volumes

expected if even growth would I delay. So with seems numbers, like, it the some the volumes just have I'm in running

color just some could additional there. we So seeing get if

tons for think bit that, the came in As about we X.XX the I with XX,XXX little we of XX,XXX just think release quarter, a described shy Hurricane X.X actually we tons I in neighborhood the million, expected short due tons and of to dock Ian. left million our on that October

that [Indiscernible]. pencils out think I So

on then the to historic to and delays And Shai there and of know levels we should then cap talked the we built. has capital trend could Maybe a working talk note, over expect somewhat in the quarters? remarks, kind prepared and how his of if working this I just to the impact related coming

Kind of question the capital unpack activities, thinking try cash -- I'm maybe this. like if on about and working I'll flow I'll

in So have timing $X which part is the simplification effect you used for adjusted account And is of EBITDA which be cash And from in paid, about of for of timing about to payment flow prepared then MSA when from flow about -- the quarter, about into interest third before also million third flow operating the we million. $XX are there activities to the the $XX higher simplification on our you're -- the million waivers is part third how and we and included, adding included quarter, about million. cash $X operating quarter. Bond, cost operating be have we the activities Then integration million our of used about take the we quarter. so acquisition as cash some the get during you coupon that's that structure support payments know, of to cash making of fee are activities, remarks million. are for $XX the $XX from the affected inventories that on The mentioned we

with Sachs. comes The Mackay John next from Goldman question

side. contracting the on start Let's

clarify X this flight. in? set MOUs of more And have come broadly nothing but potentially an John, couple alluded I quarter, you us timing, the contracts expect about maybe maybe new guys under tons of the you last million talked some just guess, you Could to give you update of those on to, So when quarters?

here Alder I'm that of a XXX,XXX with a quarter, missed critical would sorry, ago. addressable as production tons market US, executed I couple segment the we in out at actually, the weeks the for for aviation fuel Fuels point we for metric to to you an year sustainable the in per there. up I us look in continue field agreement total

quarter. think pretty progress I important made we So actually in some the

we X.X term the talk the ask did And across As segments out, sort about of new use impact, let line to those in actually are, lean metric six metric at our that about about months. geographies, next segments over tons new of contracts. cases. where expect across agreements of you point at X Thomas penciled the a prepared to sitting tons million look full broad talk per year we long per we're year remarks, segments that year million burn let's me in to and range And some let's of sort on some we

growth Europe, contracting that for about where the the us. market far, across hard also excited to really in side Japan years for asked there. in Poland, or all, seeing power would as big so we're heat at be XX like momentum slowed about really part talked you that that contracts and now. John Taiwan. down tons Germany, about in on the side. We've in industry million we are has also not The that and many other strongly and abate really see have volumes the we're is We're have UK, are we're what post that they are both XX really generators of seeing that the thinking momentum out seeing as point next like materialize contracted of board about for places the well X negotiations that some the substantial momentum countries the XXXX volumes, geographies. We're talked criteria And that continues discussions of of to I European now a course, key of and

of part to good quarter. so -- this really the turn pricing let's maybe another was I Maybe market, guess,

You about spot guys talked benefits.

EBITDA the you just much kind spot introduced cargoes of mix? EBITDA, expect what could benefit long spot if about You talk 'XX maybe overall how this of how idea term look into quarter going doing or that or of and forward. maybe kind like also Can much you benefits maybe more more and of was, optimization -- we

book the of the I the we're as think market, had that assets production range in dampening you've participant in of that And that the consistently of kind quite we our of a on part and volume reported as we seen geographies, Ukraine a as given of of historically. long a commented that war year, third party very large effect the been a business, out both started term has large well implications outtakes which availability, as across

the meantime, For of availability see is in have of like to happened of product Rim. begun from the area an dampening places a the Pacific of XXXX, in the given have we some course, challenges markets historically. we This is that procured expected and in which emerge that What's kind to Europe.

I elsewhere, Asia with have structured access contracts into begin into and partner increasingly, to of think seeing in And what Asian in where Southeast term the places move our Japanese is term those to long we contracts we've of in marketplace. out contracts volumes ability there. our British of our described included, shipping agreements Australia both we're able a we're volumes Columbia as and some for new long to XX-K, portfolio production because of our

contracted historically as think -- a the access we well certainly right very because enable our where It's And financial term business. seeing we're From that demand. the year-over-year. be part This that with pricing business. move is right? product seasonal that what is very, flow, efficiently I able as both into performance And shipping the a we it of access markets a of you to agreements we a company's our have contracted have long position now as across so look and of cargo enabled physical and still this is is business quite the have our logistical part partners customers benefit, that our to perspective,

is that half strongest The we generally second of of strong us continue. the typically the with period being the a would year consistent to our year quarter quarter, expect that's our for been next pattern and fourth

factors. the in half generally we the quarter the a So the a a we've of pricing is year, in underlying way operate seasonal for of got uptick in really the benefit second number fourth margin expansion Obviously, business. the large

in and deliveries generally into environment of half in where the higher the and sell our operate able we're generally conditions winter costs price where some an season to able So sort lower our the we're fall. second given to year, of of are

that in XX% and pricing, of What the this the hasn't the And escalators contracts on about I'd conditions a our past. the our providing factored in are into the a actually has prints continued. inflationary durable little bit a recent UK and But number, of that sort uplift and similar say increases, talked those escalators in print, in Eurozone significant we've pricing been contracts. certainly, very

new incremental what important some Shai in with the few some to priced quarter. the course, opportunity value we’ll will been repricing a is fulsome of certainly contracts as described, would again, back the earlier with think, much sell have And That, for situations dislocations seen of that contract and us price higher more you it's year the our monetize. to several spot QX than customers XXXX bit XXXX So be high market, see ago vessels about contracts The of sort dislocations early the guide, provide of the perspective appropriately into volume. in the in certainly combined also in we're entry a potentially win-win a part And the with relatively and our able we existing it. years into on give contracts modest, is our that and come at to for the of of portfolio. which that I would what existing increases overall we in the We've certain talked a reflective that expect of firm. within number are and in

The comes from Citi. Ryan next with question Levine

your site. & Web your Trace update on the disclosures Track on Appreciate

any you different to be if to law any of would that's how helpful it if have contracts? extent were to to could or speak they were data any terms, of contracts your if your customers material change to than rule the the change expected? have ounce think ability to in provisions I that any Or there's have your be

all, have that's And with we're [HPV]. build and So compliance basis first our customers. of of with on contractual They FSC. audits audits third these PFC we in all on audits, compliance party for the our robust course, through and

shows entirely creates basis, to just take transparency above an beyond system that regulatory From Our from and customers a no our that goes our industry it & that, way issues because what's front and transparency. like contractual all it footed different Track like. incredible are level trying possible Regulators this we're to there Trace of a we're through where basis, whatsoever.

discussions continue And part beyond. be core and of Trace to a have lien, and our we with and Track going our regulators, above to opportunity the & customers so again, I'm and but we glad go to explain it's

your And Ryan, to specific question.

[Indiscernible] we've Enviva for As about for previously, contracts [Indiscernible]. to any closure] change provide our talked [admitted the generally

hearing are that audited the I So and to that correctly? market disclosure based providing your contracts customers. the Am on you're

correct. that's Yes,

a all enter that laws the So an customer. provisions. deliveries the agreement, value into any the at complied with when standard generally have time and the effect our of into of required entry we the that of have extent of any contractual in sustainability change, the borne by To our contract is specified we our is

times then gears, shifting longer and to mentioned several operate that volumes strategy, your market you How on your term both party structures? contract impact Pacific And Rim existing third developments. ability within does

with sort contracts base Well, have a volumes under proposition in of deliver is you producers our as and do stage basis, to the to would the our that seen from too, our growth. the long we've earlier that business of market, for or ability value term core so customers, domestic enter new smaller of our so done

to produced on and that resources our has ratably in these And volumes us in produce for model volume been to customer That where the but Southeast and ago, volumes a volumes contracts the us the fact very delivered. durably European the where moment and they're a globe. base business, in Asian model party are be deliver part set. US, a described volumes the capture third have into volumes so be around long ultimately by you are physical the the can procurement sustainable we we And enabled procured position the the differentials and that the those other there the very to basis a very favorable Again, and seek term capture enables created between that largest supplier fact world. means the delivery generally do as And between deliver to regions ultimately of be so. can on can basic value that with enables differential, around customers shipping certain our to logistics that this a accrue product this physical of and us those can extent the and incredibly in commodity, contracted we should differential

And did question your costs last movement the for me. in and impact How outlook? diesel the quarter

our impact cost certainly, we've mitigate some where that. to obviously, with both gone diesel but So procure we've process is cost when of you able doesn't something I did of entirely, the earlier modulated, some electric described chipper, we was year, the way changes of eliminating our an in have fiber instance, to in that truckers and seen the work for help number our that think, that fiber. it experience, delivered to generally away as a mitigates and loggers that that chipper fiber. particularly do way them It has again, as earlier, in exposure diesel, that a we volatile mean chipping our have in it operationalize [tower], as we we well that that. been of diesel But And replacing our by it's see to we

from comes Elvira Markets. question Scotto next Capital Our Instructions] with [Operator RBC

of a little talked financing potential about bit some your You plans.

I across types lot look I environment? growth mean, you just given that have cost you expect, of what broadly, of financing we're out in alternatives, then you ahead do And more you. these this rising a of mean different As rate

growth So of broadly you over need and plans in can ahead your you to that of all the finance you capital you that allocation coming about have just plants talk years? this more the light of

it's in quite a regular not going even visibility year think do conversion from way reminder start C-Corp. IDRs the that that the the the markets, a financing things today, even the one recently. project a bit of of achieve I rationale of fully important little to in of for internalization that. and of on were reserves over thinking to some of a little But to more assets about of probably And the done limited basis, the lean and the of I'm about the of opposed a we're on preservation the first finance a we're provide the we've we how of drivers And $X muni that years acquisition let where on with master to sit that structures partnership to into Shai into elimination going the contracted we our of as combination capital things five forecast from activity sponsor. and those cash basis underlying construction was billion and

incremental of case. better an the we be the that's as acquisition funding should billion $X course, internal prior Of But sponsor. burden mitigated assumed that than of by SG&A part our from the laying we approximately basis,

for going Shai, available this think great year, we some we that were really we forward. the already travel you for we with XXXX, to a a have even this not what near to that. balance market. a so model. able we Epes a the that replicable lean associated that's It plans, awarded well for opportunities long look to an And But muni boy, And we're that structure there to We think type We agreement debt of the and It's funding was want perhaps has instrument self very as as clearly that Mississippi raised avenue that partnership. continue financing. as bit as opportunity us particular on the given as doesn't look little part attractive replicable an tackle [balance] that market. certainly of accessed we only seeing that's important facility approached into and we're we and us. term. to capital the and year our entities, of will between term growth given recently way inducement about sheet, our transition growing we is equivalent And us limited that, where how both earlier articulated, forward, in think a one is Bond our tranche not had component certainly, because conservatively was a debt an It particular an available debt particular historically master facility. that to But be been

But multiple, capital X times are we our EBITDA debt No at approximately times volatile. at profile, question markets multiple. X developing we're plans when looking that the EBITDA growth are

we markets. So the our accretive, high the our cash accretive as market, project taxable earlier as open, market. still you're capital very about to mentioned other not market thinking to volatile Also, debt yield muni are when about as financing you're very volatile thinking ability what investments the earnings. as in When very, not about flows and participate our

So a in build, four the there next ability to but in cost, plants meaningful six over to impact and continue in, earlier, way is that an should our five we grow not years. increase it's all as to mentioned

throughout then little on this remarks, know other I you of to quantification. questions prepared in a bit some but And your get touched maybe the more hoping

driver? drivers look what quantify still then I into we escalators, should be how mean out fourth you of there's should quarter you And ton trending? metric expect to biggest the if we per as know we be quarter, I it moderate it of higher Your range, to inflation Do of the the to $XX that in that element or $XX the this, but is see of adjusted the little to that XXXX? you expect that do XXXX, say, is have XXXX, increase gross can you margin fact fourth seasonal mean, kind there's are what $XX? just bit? some generally we're -- I in in like speaking, a exiting that biggest

strongest we've our I historically, generally consistently QX is as demonstrated mean quarter.

QX margin So the an year. guided a step get to the we've on expect benefit of even you'd to pretty that a the this seasonal for second significant and basis, half Certainly, we up of think increase, that see I in reflects year. actually

natural on margin fact above and in an of second the in to like business cost so half inflationary that's you have and component where I contracts headline about margin The replicate frankly, seasonal -- some are something think seeing would increases, exposure well, the increases expect that the that and impact we within increased mean But we're faster when the gas durable right? model why about our right? probably the derivative and meaningful, sort some work think [tower]. our impact that's price inflationary of our is, RTOs because of increasing in fleet of driving that our pricing. increases that power, again over it's The each you all providing on well, first of what are the pressures impact, then and doing price in obviously, obviously, provisions XXXX operating pricing rate that's XXXX. half So headline headline where than

of cost So tower. price in impact some increases, an margin environment basis while have the like expansion that, you even headline are you on on the seeing

the which headline to business a create CPI, the price, this much legacy and on ago. has finally, based additional margin, be in depending consistent than CPI, higher and that done entering particular would seen Thomas much But provisions specific certain do a volume What of into CPI, are the years very, -- in of to the contract, specific what fulsome contractual of of now Eurozone we Similarly, because year XXXX? course. price price increases the environment at contracts working or seeing current historically. to the more headline of we looking term contracted it's on have about on are US like inflates and coming price our whether our escalation very contracts in than And five a book long that inflating UK team see and in tried Well, seven life the have would repricing with bring of and our what we're give come course, more within consideration job environment we [Indiscernible] executed we've good and back in that existing customers obviously, are with for guide. new going to we quite things others we're pricing

print is there's be that, of year, second course, is we remarkable be both if this do [Indiscernible] to quite impact And next QX year back what seasonality we of it half think durable. which a again, And possible. deliver think and the then, so to very we strong,

question flow do you a operations cash operations like running your operations. a is just then for from from me, It your could at of When on And positive? this million, positive at year-to-date. at point flow last cash quarter cash a $XX an you still looks think basis a annual be from you're kind where looking negative was flow

should is our us are approximately in expect way you to we dividend that are of we it, from account in The our press EBITDA. into time. projected XXXX So coverage mentioned we see like calculating X.X ratio taking what release

expenditures $X Obviously, transition were there we from midpoint $XXX capital activities. year, as maintenance interest So $XXX to operating as adjusted million, from EBITDA. support I And only then of the The over a like give a XXXX, few paid we of dividend are kind that $XX of payments use in million. of expected adjustments to $XXX XXXX cash flow in that, about We then we let's XXXX subtracting million out to is said million million XXXX so move $XX and payments notable, mention is cash partnership XXXX, you was Simplification. expense the the And between can from in paid, like most million. coming in the mentioned, C-Corp, you say, you you sense that in moderate the subtracting are a you strong should expect to XXXX. and -- should about the that's see how

were -- down all that number that of integration in then So and and winding expect then a acquisition down. shouldn't to QX the we're that's XXXX, costs to these de reoccur of mainly a them conversion in minimis also like XXXX, of Simplification kind are -- part like because of And there were winding also in XXXX. you

is So in from operating XXXX. bottom strong activities [Technical line flow cash Difficulty] very

as distributable proxy operations, cash CapEx, from you're you're using if the minus from as flow EBITDA minus using operations? flow maintenance DCF a for proxy But right? you're flow So taking expense cash for interest cash

cycle recall you cycle, -- collection should have the it a payables be cash should very on expect, in year over year, quick No. basis, relatively on inventories should from inventories cycle us. of our stable. changes course But and you And moderate the also like receivable we full a that expect accounts

So later. you XX mentioned is of collected see the about days cash shouldn't completion. inventory. has five days collected consuming AR XX% been completion, from other that the AR We of certificate on about XX% Then

uses basis in small of very ongoing So working on cash capital. an

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

more and cost to be much, and forward for to to the privileged, to do short look few deliver we the thanks, to quickly join effectively we connecting We offer today. the continue deliver months. that secure what taking forward more carbon, in less you. unique very that sustainably, that wants, continuing incredibly exactly you everyone, and world opportunity to is Thank it time this build a again and just where platform look to sources. the We from Thank company

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

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