On November 9, 2023, Enviva Inc, the world’s largest producer of wood pellets, a renewable alternative to coal, released its financial results for the third quarter (Q3) of 2023, revealing a substantial net loss and a decline in adjusted EBITDA compared to the same period last year. The company also announced significant leadership changes and a strategic review of its capital structure to enhance its financial position. In response to these developments, Enviva’s stock experienced a sharp decline. After closing at $3.84 the previous day, the stock opened at $1.64 and is currently trading at $0.91.
At the time of this publication, Enviva Inc stock (EVA) has witnessed a decline.
Enviva Inc
Current Price: $0.92
Change : -2.92
Change (%): (-76.04%)
Volume: 7.9M
Source: Tomorrow Events Market Data
Enviva reported a net loss of $85.2 million for Q3 2023, marking a considerable increase from the net loss of $18.3 million reported for the same period in 2022. This loss included $21.2 million of asset impairments, $22.1 million of interest expense on repurchase accounting, and $6.3 million of restructuring costs not incurred in the previous year. Adjusted EBITDA for the quarter was $36.6 million, down from $60.6 million in Q3 2022, primarily attributed to lower revenue from commercial activities.
Despite the financial setbacks, Enviva made strides in its operational transformation plan, achieving a 14% year-over-year increase in metric tons sold and reducing delivered at port (DAP) costs per metric ton by $9 to $152. These improvements were driven by enhancements in production across Enviva’s plant fleet.
In response to these challenges, Enviva Inc has enlisted advisors to conduct a comprehensive review of alternatives aimed at fortifying its capital structure, bolstering liquidity, and enhancing long-term profitability. Glenn Nunziata, formerly the CFO, has been appointed interim CEO to spearhead the company through its transformation plan. Thomas Meth, continuing as President, is focused on renegotiating contracts to realign the business model towards predictable, profitable take-or-pay contracts.
Evniva Inc Q3 2023 Financial Results:
The net revenue of Enviva Inc for Q3 2023 was $320.6 million, a slight decrease from $325.7 million in the same period of 2022. The gross margin dropped to $14.2 million from $31.8 million year-over-year, with gross margin per metric ton declining to $9.90 from $25.28. The adjusted gross margin also saw a decrease to $56.8 million from $75.4 million in the previous year.
As of September 30, 2023, the company’s liquidity stood at $440.7 million, with $315.2 million in unrestricted cash. However, Enviva had drawn the full amount available under its $570.0 million senior secured revolving credit facility and remained in compliance with its covenants as of the reporting date.
Looking ahead, Enviva Inc has withdrawn its previous guidance for 2023 and future years due to the liquidity factors and comprehensive review outlined above. The company anticipates a significantly higher net loss, lower sales price per metric ton, and lower adjusted EBITDA for full-year 2023 compared to full-year 2022. Enviva is also evaluating potential alternatives to maintain compliance with its covenants under the senior secured credit facility and to mitigate the adverse liquidity impact of recent transactions.
