UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20202021
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission file number 001-37363
eva-20211231_g1.jpg
Enviva Partners, LPInc.
(Exact name of registrant as specified in its charter)
Delaware46-4097730
(State or other jurisdiction(I.R.S. Employer
of incorporation or organization)Identification No.)
72007272 Wisconsin Ave.Suite 10001800
Bethesda,MD20814
                     (Address(Address of principal executive offices)(Zip code)
(301)657-5560
(Registrant’s                     (Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Units Representing Limited Partner InterestsStockEVANew York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes     No 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐    No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒Accelerated filer
Non-accelerated filer ☐Smaller reporting company
 Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No ☒
The aggregate market value of the common units held by non-affiliates of the registrant as of June 30, 20202021 was approximately $943.5 million$1,646,811,507 based upon a closing price of $36.04$52.41 per common unit as reported on the New York Stock Exchange on such date.
As of February 15, 2021, 40,023,10528, 2022, 66,558,919 shares of common unitsstock were outstanding.
Documents Incorporated by Reference:
None


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ENVIVA PARTNERS, LPINC.
ANNUAL REPORT ON FORM 10‑K
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CAUTIONARY STATEMENT REGARDING FORWARD‑LOOKING STATEMENTS
Certain statements and information in this Annual Report on Form 10‑K (this “Annual Report”) may constitute “forward-looking statements.” The words “believe,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could”“could,” or other similar expressions are intended to identify forward‑looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. Although management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts forof our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from those in our historical experience and our present expectations or projections. Important factorsFactors that could cause our actual results to differ materially from those in the forward-looking statements include, but are not limited to, those summarized below:
the volume and quality of products that we are able to produce or source and sell, which could be adversely affected by, among other things, operating or technical difficulties at our wood pellet production plants or deep-water marine terminals;
the prices at which we are able to sell our products;
our ability to successfully negotiate, complete and integrate drop-down or third-party acquisitions, including the associated contracts, or to realize the anticipated benefits of such acquisitions;
failure of our customers, vendors, and shipping partners to pay or perform their contractual obligations to us;
our inability to successfully execute our project development, capacity expansion, and new facility construction activities on time and within budget;
the creditworthiness of our contract counterparties;
the amount of low-cost wood fiber that we are able to procure and process, which could be adversely affected by, among other things, disruptions in supply or operating or financial difficulties suffered by our suppliers;
our ability to successfully negotiate, complete, and integrate third-party acquisitions, or to realize the anticipated benefits of such acquisitions;
changes in the price and availability of natural gas, coal, or other sources of energy;
changes in prevailing economic conditions;
unanticipated ground, grade or waterand market conditions;
inclement or hazardous environmental conditions, including extreme precipitation, temperatures, and flooding;
fires, explosions, or other accidents;
changes in domestic and foreign laws and regulations (or the interpretation thereof) related to renewable or low-carbon energy, the forestry products industry, the international shipping industry, or power, heat, or combined heat and power generators;
changes in domestic and foreign tax laws and regulations affecting the taxation of our business, and investors;
changes in the regulatory treatment of biomass in core and emerging markets;
our inability to acquire or maintain necessary permits or rights for our production, transportation, or terminaling operations;
changes in the price and availability of transportation;
changes in foreign currency exchange or interest rates and the failure of our hedging arrangements to effectively reduce our exposure to the risks related thereto;risks;
risks related to our indebtedness, including the levels, and maturity date of such indebtedness;
our failure to maintain effective quality control systems at our wood pellet production plants and deep-water marine terminals, which could lead to the rejection of our products by our customers;
changes in the quality specifications for our products that are required by our customers;
labor disputes, unionization, or similar collective actions;
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our inability to hire, train, or retain qualified personnel to manage and operate our business and newly acquired assets;
the effectspossibility of the exit of the United Kingdom from the European Union on ourcyber and our customers’ businesses;malware attacks;
our inability to borrow funds and access capital markets; and
viral contagions or pandemic diseases, such as the recent outbreak of a novel strain of coronavirus known as COVID-19.
All forward-looking statements in this Annual Report are expressly qualified in their entirety by the foregoing cautionary statements.
Please read Part I, Item 1A. “Risk Factors.” Readers are cautioned not to place undue reliance on forward-looking statements and we undertake no obligation to update or revise any such statements after the date they are made, whether as a result of new information, future events or otherwise.
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GLOSSARY OF TERMS
biomass: any organic biological material derived from living organisms that stores energy from the sun.
co-fire: the combustion of two different types of materials at the same time. For example, biomass is sometimes fired in combination with coal in existing coal plants.
cost pass-through mechanism: a provision in commercial contracts that passes costs through to the purchaser.
dry-bulk: describes dry-bulk commodities that are shipped in large, unpackaged amounts.
metric ton: one metric ton, which is equivalent to 1,000 kilograms and 1.1023 short tons.
nameplate: the intended full-load sustained maximum rated output of production.
net calorific value: the amount of usable heat energy released when a fuel is burned completely and the heat contained in the water vapor generated by the combustion process is not recovered. The European power industry typically uses net calorific value as the means of expressing fuel energy.
off-take contract: an agreement concerning the purchase and sale of a certain volume of future production of a given resource such as wood pellets.
ramp: increasing production for a period of time following the startup of a plant or completion of a project.
Riverstone: Riverstone Holdings LLC.
Riverstone Funds: Riverstone/Carlyle Renewable and Alternative Energy Fund II, L.P. and certain affiliated entities, collectively.
stumpage: the price paid to the underlying timber resource owner for the raw material.
utility-grade wood pellets: wood pellets meeting minimum requirements generally specified by industrial consumers and produced and sold in sufficient quantities to satisfy industrial‑scale consumption.
wood fiber: cellulosic elements that are extracted from trees and used to make various materials, including paper. In North America, wood fiber is primarily extracted from hardwood (deciduous) trees and softwood (coniferous) trees.
wood pellets: energy-dense, low-moisture, and uniformly sized units of wood fuel produced from processing various wood resources or byproducts.
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PART I
ITEM 1.    BUSINESS
Unless otherwise statedOn December 31, 2021, Enviva Partners, LP (the “Partnership”) converted from a Delaware limited partnership to a Delaware corporation (the “Conversion”) named “Enviva Inc.” References to “Enviva,” the “Company,” “we,” “us,” or “our” refer to (i) Enviva Inc. and its subsidiaries for the periods following the Conversion and (ii) Enviva Partners, LP and its subsidiaries for periods prior to the Conversion, except where the context otherwise indicates, all references in this Annual Report to “we,” “us,” “our,” the “Partnership,” or similar expressions refer to Enviva Partners, LP, including its subsidiaries.requires. References to “our former sponsor” refer to Enviva Holdings, LP, and, where applicable, its wholly owned subsidiaries Enviva MLP Holdco, LLC and Enviva Development Holdings, LLC. References to “our former General Partner” refer to Enviva Partners GP, LLC, a wholly owned subsidiary of Enviva Holdings, LP. References to “Enviva Management Company” refer to Enviva Management Company, LLC, a wholly owned subsidiary of Enviva Holdings, LP, together with its affiliates that provide services to us, as applicable. References to “our employees” refer to the employees of Enviva Management Company and its affiliates who provide services to the Partnership. Please read Cautionary Statement Regarding Forward-Looking Statements beginning on page 1 and Item 1A. “Risk Factors” for information regarding certain risks inherent in our business.
Overview
We are a growth-oriented company originally formed in 2013 as a master limited partnership formed in 2013 that is focusedconverted to a corporation on owning, operatingDecember 31, 2021. We develop, construct, acquire, and acquiring assets from our sponsor or third parties. Weown and operate, fully contracted wood pellet production plants where we aggregate a natural resource, wood fiber, and process it into a transportable form, wood pellets.dry, densified, uniform pellets that can be effectively stored and transported around the world. We primarily sell a significant majority of our wood pellets through long-term, take-or-pay off-take contracts with creditworthy customers in the United Kingdom (the “U.K.”), Europethe European Union, and increasinglyJapan, who use our pellets to displace coal and other fossil fuels to generate renewable power and heat as part of their efforts to accelerate the energy transition from conventional energy generation to renewable energy generation. Increasingly, our customers are also using our pellets as renewable raw material inputs to decarbonize hard-to-abate sectors like steel, cement, lime, chemicals, and aviation fuels. Collectively, the wood pellets we produce are viewed by our customers as a critical component of their efforts to reduce life-cycle greenhouse gas emissions in Japan. their core energy generation or industrial manufacturing processes, and mitigate the impact of climate change.
We own and operate nineten plants (collectively, “our plants”) with a combined production capacity of approximately 5.36.2 million metric tons of wood pellets per year (“MTPY”) of wood pellets in Virginia, North Carolina, South Carolina, Georgia, Florida and Mississippi, the production of which is fully contracted through 2025.with many of our contracts extending well into the 2040s. We export our wood pellets to global markets through our wholly owned dry-bulk, deep-water marine terminal at the Port of Chesapeake, Virginia, (the “Chesapeake terminal”) and terminal assets at the Port of Wilmington, North Carolina, (the “Wilmington terminal”)and the Port of Pascagoula, Mississippi, and from third-party deep-water marine terminals in Savannah, Georgia, (the “Savannah terminal”), Mobile, Alabama, (the “Mobile terminal”) and Panama City, Florida (the “Panama City terminal”).Florida. All of our facilities are located in geographic regions with low input costs and favorable transportation logistics. Owning these cost-advantaged assets the output from which is fully contracted through 2025, in a rapidly expanding industry provides us with a platform to generate stable and growing cash flows. Our plants are sited in robust fiber baskets providing stable pricing for the low-grade fiber used to produce wood pellets. Our raw materials are byproducts of traditional timber harvesting, principally low-value wood materials, such as trees generally not suited for sawmilling or other manufactured forest products, and tree tops and limbs, understory, brush, and slash that are generated in a harvest.
Our sales strategy is to fully contract the wood pellet production from our plants under long-term, take-or-pay off-take contracts with a diversified and creditworthy customer base. Our long-term off-take contracts typically provide for fixed-price deliveries that mayoften include provisions that escalate the price over time and provide for other margin protection. During 2020,2021, production capacity from our wood pellet production plants, andtogether with wood pellets sourced from our affiliates and third parties werewas approximately equal to the contracted volumes under our existing long-term, take-or-pay off-take contracts. Our long-term, take-or-pay off-take contracts provide for a product sales backlog of $14.6$21.2 billion and have a total weighted-average remaining term of 12.814.5 years from February 1, 2021. Under our current product sales backlog, our plants are fully contracted through 2025. Assuming all volumes under the firm and contingent long-term off-take contracts held by our sponsor were included with our product sales backlog for firm and contingent contracted product sales, our product sales backlog would increase to $19.9 billion and the total weighted-average remaining term from February 1, 2021 would increase to 14.0 years.2022.
Our customers use our wood pellets as a substitute fuel for coal in dedicated biomass or co-fired coal power plants. Wood pellets serve as a suitable “drop-in” alternative to coal because of their comparable heat content, density and form. Due to the uninterruptible nature of our customers’ fuel and other raw material consumption, our customers require a reliable supply of wood pellets that meet stringent product specifications. We have built our operations and assets to deliver and certify the highest levels of product quality and our proven track record of reliable deliveries enables us to charge premium prices for this certainty. In addition to our customers’ focus on the reliability of supply, they are concerned about the combustion efficiency of the wood pellets and their safe handling. Because combustion efficiency is a function of energy density, particle size distribution, ash/inert content and moisture, our customers require that we supply wood pellets meeting minimum criteria for a variety of specifications and, in some cases, provide incentives for exceeding our contract specifications.
Our Production Plants, Logistics and Storage Capabilities
We procure low-grade wood fiber and process it into utility-grade wood pellets and load the finished wood pellets into railcars, trucks, and barges for transportation to deep-water marine terminals, where they are received, storedwe receive, store and ultimately loadedload our products onto dry bulk cargo oceangoing vessels for delivery to our customers.
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We own and operate nineten industrial-scale wood pellet production plants strategically located in the Mid-Atlantic and Gulf Coast regions of the United States, geographic areas in which wood fiber resources are plentiful and readily available. Our plants are constructed accordingWe employ a “build-and-copy” approach to a “build and copy” approach,the construction of new capacity, which allows for operating efficiencies.efficiencies in the engineering, design,
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construction, and operation of our facilities. Furthermore, our multi-plant profile and scale provide us with flexibility under our portfolio of off-take contracts that enhances the reliability of our deliveries and provides opportunities for optimization.
Our facilities are designed to operate 24 hours per day, 365 days per year, although we schedule up to 15 days of planned maintenance for our wood pellet production plants during each calendar year. There are no regularly required major turnarounds or overhauls.
The following table describes our wood pellet production plants:plants, all of which we wholly own:
Plant LocationPlant LocationYear of Acquisition or Operations CommencedProduction (MTPY)Plant LocationYear of Acquisition or Operations CommencedNameplate Production (MTPY)Receiving Terminal Location
Ahoskie, North CarolinaAhoskie, North Carolina2011410,000 Ahoskie, North Carolina2011410,000 Chesapeake
Amory, MississippiAmory, Mississippi2010115,000 Amory, Mississippi2010115,000 Mobile
Cottondale, FloridaCottondale, Florida2015780,000 Cottondale, Florida2015780,000 Panama City
Greenwood, South CarolinaGreenwood, South Carolina2020500,000 Greenwood, South Carolina2020600,000 Wilmington
Hamlet, North CarolinaHamlet, North Carolina2019600,000 Hamlet, North Carolina2019600,000 Wilmington
Northampton, North Carolina (1)2013750,000 
Lucedale, Mississippi(a)
Lucedale, Mississippi(a)
2021750,000 Pascagoula
Northampton, North CarolinaNorthampton, North Carolina2013750,000 Chesapeake
Sampson, North CarolinaSampson, North Carolina2016600,000 Sampson, North Carolina2016600,000 Wilmington
Southampton, Virginia (1)2013760,000 
Southampton, VirginiaSouthampton, Virginia2013760,000 Chesapeake
Waycross, GeorgiaWaycross, Georgia2020800,000 Waycross, Georgia2020800,000 Savannah
TotalTotal5,315,000 Total6,165,000 
(1)(a) Production capacities for the NorthamptonWe are currently constructing and Southampton plants include increased production capacity pursuant to ongoing expansion projects. After a ramp period for the expansion projects, the Northampton and Southampton plants are expected to each reach 750,000 MTPY and 760,000 MTPY, respectively, by the end of 2021.
Ahoskie
We acquired the site of our wood pellet production plant in Ahoskie, North Carolina (the “Ahoskie plant”) in December 2010 and constructed the Ahoskie plant there in less than one year, commencing operations in November 2011. Through an expansion completed in June 2012, we increased the plant’s production from 260,000 MTPY to 350,000 MTPY and have made further improvements to increase production to 410,000 MTPY of wood pellets.
Production from the Ahoskie plant is transported by truck to our Chesapeake terminal.
Amory
We purchasedcommissioning a wood pellet production plant in Amory, Mississippi (the “Amory plant”) in August 2010. The Amory plant initially consisted of three pellet mills producing wood pellets at a rate of 41,500 MTPY. Through operational improvementsLucedale, Mississippi; nameplate production represents production after construction and installation of a fourth pellet mill, the Amory plant currently produces 115,000 MTPY of wood pellets.
Production from the Amory plant is transported by barge to the Mobile terminal.
Cottondale
Our sponsor acquired a wood pellet production plant in Cottondale, Florida (the “Cottondale plant”) in January 2015 and contributed it to us in April 2015. We have undertaken several expansions and process improvements at the Cottondale plant since acquiring it from our sponsor and have increased its production capacity from 720,000 MTPY to 780,000 MTPY of wood pellets since 2016.
Wood pellets produced by the Cottondale plant are transported approximately 50 miles by short-line rail to a warehouse that currently can store up to 32,000 metric tons (“MT”) of wood pellet inventory at the Panama City terminal.
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Greenwood
Our sponsor acquired a wood pellet production plant in Greenwood, South Carolina (the “Greenwood plant”) in February 2018 and contributed it to us in July 2020. Procurement and detailed engineering activities to expand the Greenwood plant’s production capacity to 600,000 MTPY are underway and we expect the expansion to be completed by year-end 2021.
Production from the Greenwood plant is transported by rail to the Wilmington terminal.
Hamlet
In April 2019, we acquired from our sponsor all of the Class B units of Enviva Wilmington Holdings, LLC (the “Hamlet JV,” and such acquisition, the “Hamlet Drop-Down”). The Hamlet JV owns a wood pellet production plant in Hamlet, North Carolina (the “Hamlet plant”). We are the managing member of the Hamlet JV, which is partially owned by John Hancock Life Insurance Company (U.S.A.) and certain of its affiliates (collectively, where applicable, “John Hancock”). We accounted for the Hamlet JV as a consolidated subsidiary, not as a joint venture, following the Hamlet Drop-Down. For more information regarding our rights and obligations with respect to the Hamlet JV, see Note 17, Partners’ Capital—Hamlet JV.
Production from the Hamlet plant is transported by rail to our Wilmington terminal.
Northampton
Our wood pellet production plant in Northampton, North Carolina (the “Northampton plant”) was constructed based on the Ahoskie plant design, utilizing the same major equipment suppliers. After a ramp period for the expansion project, the Northampton plant’s production capacity is expected to increase by 200,000 MTPY to 750,000 MTPY by the end of 2021.
Production from the Northampton plant is transported by truck to our Chesapeake terminal.
Sampson
Our wood pellet production plant in Sampson, North Carolina (the “Sampson plant”), which was built based on our templated design and which we acquired from our sponsor’s first development joint venture in December 2016, commenced operations during the fourth quarter of 2016.
Production from the Sampson plant is transported by truck to our Wilmington terminal.
Southampton
We acquired a wood pellet production plant in Southampton County, Virginia (the “Southampton plant”) from our sponsor’s first development joint venture in December 2015. The Southampton plant is a build-and-copy replica of our Northampton plant. After a ramp period for the expansion project, the Southampton plant’s production capacity is expected to increase by 200,000 MTPY to 760,000 MTPY by the end of 2021.
Production from the Southampton plant is transported by truck to our Chesapeake terminal.
Waycross
In July 2020, we acquired a wood pellet production plant in Waycross, Georgia with a production capacity of approximately 800,000 MTPY (the “Waycross plant”).
Production from the Waycross plant is transported by rail to the Savannah terminal.
Wood Fiber Procurement and Sustainability
Our fleet of production plants is sited in robust fiber baskets in the Southeast United States that sustainably support our growth operations with low-grade fiber. Our sites minimize wood fiber procurement and logistics costs, which provides a structural cost of goods advantage over many other fiber baskets around the world. Although “stumpage,” the industry term for the amount of consideration paid for fiber, constitutes a small portion of our total cost of delivered products, wood fiber procurement is a vital function of our business and cost-effective access to wood fiber is an important factor in our pricing stability.
Wood fiber is a unique energy commodity in that, in resource basins like the Southern United States where we operate, more wood fiber grows each year than is harvested, meaning that the commodity is a negative depletion resource. Over the period from 1953 to 2015, the amount of timberland acreage in the U.S. South remained stable; however, during this same period wood fiber inventory stored in Southern forests increased by 108%. Between 2011, the year in which we opened our first wood pellet production plant, and 2019, forest inventory in our overall supply base increased by more than 370 million MT, or 18%.
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Because wood fiber is approximately 50% water at the time of harvest, it has a limited economically efficient distribution radius of roughly 75 miles. The combination of consistent excess supply over demand for a commodity that is not cost-effective to transport to new demand regions means that this stranded natural resource experiences structurally stable long-term pricing: during the period from 2000 to 2018, the delivered cost of fiber in North Carolina, one of our primary sourcing areas, increased at a modest 1.6% compound annual growth rate with limited annual volatility.
We and our customers are subject to stringent requirements regarding the sustainability of the fuels they procure. In addition to our internal sustainability policies and initiatives like our Responsible Sourcing Policy, our wood fiber procurement is conducted in accordance with leading forest certification standards.standards, and we maintain multiple forest certifications. Our fiber supply chains are routinely audited by independent third parties. Weparties, and we maintain multiple forest certifications including: Forest Stewardship Council (FSC®) Chainthe traceability of, Custody, FSC® Controlled Wood, Programme forand make public, information concerning the Endorsement of Forest Certification (PEFC™) Chain of Custody, Sustainable Forestry Initiative (SFI®) Fiber Sourcing and SFI® Chain of Custody. We have obtained independent third-party certification for all ofprimary wood that is delivered to us directly from forests via our plants to the applicable Sustainable Biomass Program (SBP) Standards.proprietary Track & Trace® system.
Our wood fiber demand is complementary to, rather than in competition with, demand for high-grade wood for use byfrom most other forest-related industries, such as lumber and furniture making. For example, improvements in the U.S. housing construction industry typically increase the demand for construction-quality lumber, which in turn increases the available supply of the low-cost pulpwood and mill residues that we use in wood pellet production. By using commercial thinnings and byproducts as raw materials, wood pellet production also indirectly supports other forest-related industries as well as the sustainable management of commercial forests.
We make wood pellets only with low-grade or leftover wood. Across our combined supply base, approximately 10% of the volume of harvested wood is purchased by us and other wood pellet producers, which represents an estimated 4% of the total stumpage value of harvested timber. Our sponsor has created a first-of-its kind, proprietary Track and Trace® program to track the origin and characteristics of fiber that we use, and we publish this information, providing unprecedented transparency into our fiber sourcing activities.
The wood fiber used for wood pellet production predominantly is comprised of:
low-grade wood fiber: trees or wood that are unsuitable for or rejected by the sawmilling and lumber industries because of small size, defects (e.g. crooked or knotty), disease, or pest infestation;
tops and limbs: the parts of trees that cannot be processed into lumber;
commercial thinnings: harvests that promote the growth of higher value timber by removing weaker or deformed trees to reduce competition for water, nutrients, and sunlight; and
mill residues: chips, sawdust and other wood industry byproducts.
furniture. Demand for the non-merchantable fiber, waste products, or byproducts that we use is generally low because they have few competing uses, in part because they cannot be transported cost-effectively. Thelow; accordingly, the tops, limbs, and other low-grade wood fiber we purchase would otherwise generally be left on the forest floor, impeding reforestation, or burned. Wood pellet
Our fleet of production provides a profitable use forplants is sited in robust fiber baskets in the residues from sawmill and furniture industries and also for the treesSoutheast United States that are thinned tosustainably support the growth of higher-value lumber-grade trees. U.S. demand for suchour growing operations with low-grade wood fiber historically emerged from the pulp and paper industry. However, due to the decline in demand from paper and pulp, many landowners lack commercial markets for this wood fiber. Wood pellet producers help fill the gap.
As a result of the fragmented nature of tract ownership in our sourcing areas, we procure raw materials from hundreds of landowners, loggers and timber industry participants, with no individual landowner representing a material fraction of any of our plants’ needs. Our wood fiber is procured under a variety of arrangements, including (1) logging contracts for the thinnings, pulpwood, and other unmerchandised low-grade fiber, (2) in-woods chipping contracts, and (3) contracts with timber dealers. Via our sponsor’s proprietary Track & Trace® system, we maintain traceability of the primary wood that is delivered to us directly from forests. Any supplier delivering wood to one of our plants must first share the details about the forest characteristics of the tract from which the wood is sourced with our forestry staff so we can verify that it meets our strict sustainability criteria. Our supplier contracts require a certification that the relevant tract information has been entered into our database before wood may be delivered directly from a particular tract. We summarize all such tract information periodically and publish tract-level details on our website. During 2020, we sourced wood fiber from approximately 363 suppliers, including brokers who source from landowners growing both hardwoods and softwoods and other suppliers. The diversity of our supply base and our facilities’ advantaged siting enables us to benefit from more reliable deliveries, at a lower cost, than others in our region or industry.
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Plant Operations
Our plants receive wood fiber in both stem-length and chip form. When this raw material is delivered by truck from our suppliers, it is scaled for weight, checked for quality and recorded consistent with our Track & Trace® system and Responsible Sourcing Policy requirements at the scale house at each of our plants. Each truck is then unloaded in a particular location in each respective plant’s woodyard based on the form and species (generally hardwood or softwood) of the raw material. Stem-length wood is stacked by radial or portal cranes and chips are piled, typically through automated conveyors to be reclaimed later for use. Stem-length wood is debarked prior to processing, providing fuel for each plant’s drying systems.
Following debarking, stem-length wood is size-reduced through a disc chipper, the chip product from which is co-mingled with delivered chips. The production process begins by mixing a specific formula of species and form factors of chips and metering them into a set of green hammer mills, which perform primary sizing. The now-smaller chips are fed into a green chip bin and metered into a rotary kiln drier, where drying heat is provided by a biomass and bark-fueled furnace. Dried chips are fed from the drier to the secondary sizing process island, which comprises a combination of screening and dry-hammermilling to further size-reduce the chips. This dry, further size-reduced flour or meal is stored in a dry storage silo and conveyed to ripening bins which further homogenize moisture prior to pelletizing. To the extent sawdust or other residuals are available, it is also size-reduced and combined with the processed wood fiber at this point in the process. The meal is metered into a series of pellet mills where hydraulic pressure extrudes the fiber into wood pellets. The pressure and temperature of the pelleting process activate natural lignin present in the wood which acts as a natural binder and finishes the pellet with a shiny exterior. The pellets are gravity-fed into large coolers which utilize counter-current air flow to reduce pellet temperature and moisture. Once cool, the pellets, then averaging approximately 5-7% moisture, are screened to reduce entrained dust and then conveyed to finished goods silos prior to being loaded onto trucks, railcars or barges depending on the facility.
Our larger plants are staffed by approximately 85-100 employees including operators, maintenance technicians, quality leads and area, shift and operations supervisors. Plants operate two shifts per day, with four employee teams operating either on an alternating three days on, two days off, two days on, three days off, or alternating four days on, four days off, basis, with a rotation between day shift and night shift periodically. Plant management consists of a plant manager, operations manager, maintenance manager, quality manager, human capital manager and an environmental health and safety manager, complemented by wood procurement, sustainability, accounting and engineering personnel.
Maintenance activities at the plant include planned and preventive maintenance as well as refurbishment of tools, dies, screens and hammers for key process equipment. The plants receive power from local utilities, have minimal process water requirements and limited exposure to fossil fuel volatility. The furnace burns wood in the form of bark and fuel chips as the source of heat for the dryer to evaporate moisture. Natural gas or propane is used as the energy source for emissions control equipment onsite like regenerative thermal oxidizers and a small amount of diesel is used in mobile equipment on each site. Very little waste besides office refuse leaves the plant as the by-product ash from the furnace operations is usually desirable as a fertilizer and is land-applied by local farmers.
To-Port Logistics and Port Infrastructure
Each of our plants is located near multiple truck, rail, river and ocean transportation access points. We also have inland waterway access and rail access at the Chesapeake, Wilmington, Savannah and Panama City terminals. Our multi-year fixed-cost contracts with third-party logistics providers allow for long-term visibility into our to-port logistics cost structure.
The wood pellets produced at our plants are stored, terminaled and shipped to our customers, principally in the U.K., Europe and increasingly in Japan. Limited deep-water, dry-bulk terminaling assets exist in the Southeastern United States, and very few of them have the appropriate handling and storage infrastructure necessary for receiving, storing and loading wood pellets. In response to such scarcity, we have vertically integrated our Mid-Atlantic operations downstream to encompass finished product logistics and storage. As a largely fixed cost and capital intensive piece of the value chain, we believe our port infrastructure allows us to ship incremental product from our regional plants at a fraction of the cost of our competitors. Management of port terminal infrastructure is also a key element in reducing distribution-related costs as it allows us to manage the arrival and loading of vessels. Additionally, we are able to improve our cost position by maintaining a dedicated berth where pellets from our Mid-Atlantic region plants have priority and equipment with sufficient load-rate capabilities to turn around vessels within the allotted time windows.
In addition to terminaling wood pellets from our production plants, we will, on occasion, provide terminaling services for third- and related-party wood pellet producers as well as for owners of other dry-bulk commodities.
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Port Operations
We acquired the ChesapeakeThe following table describes our owned and leased ports:
Port LocationThroughput Capacity (MTPY)Storage Capacity (MT)
Own/Lease(a)
Chesapeake, Virginia2,500,000 90,000 Own
Mobile, Alabama(b)
115,000 *Lease
Panama City, Florida780,000 32,000 Lease
Pascagoula, Mississippi(c)
3,000,000 90,000 Own
Wilmington, North Carolina(d)
3,000,000 90,000 Lease
Savannah, Georgia1,500,000 50,000 Lease
Total10,895,000 352,000 
(a) Represents owned ports and leased terminal in January 2011 and converted it into a dry-bulk terminal. The Chesapeake terminal receives, stores and loads wood pellets for export and serves as the shipment point for products produced at our Ahoskie, Northampton and Southampton plants. The Chesapeake terminal accommodates Handysize, Supramax and Panamax-sized vessels, and has a 200-car rail yard adjacent to a Norfolk Southern track, a loading/unloading system that accommodates deliveries by truck, rail and barge and a highly automated conveying system. In May 2011, we erected a 157-foot tall, 175-foot wide storage dome that receives, stores and loads up to 45,000 MT of wood pellets. In April 2013, we placed into operation a second storage dome at the site to add an additional 45,000 MT of storage.assets.
The Chesapeake terminal’s storage and loading capacity is more than adequate to store and facilitate the loading of the wood pellets produced at our Ahoskie, Northampton and Southampton plants, and its location decreases our customers’ transportation time and costs. Efficiently positioned near our Ahoskie, Northampton and Southampton plants, the Chesapeake terminal delivers up to a three- to four-day European shipping advantage compared to other Southern or Gulf Coast ports. In addition, because we own the Chesapeake terminal, we enjoy preferential berth access and loading, which minimizes costs of shipping and logistics without the need for excess storage. Our ownership and operation of this terminal enable us to control shipment of the production of our Mid-Atlantic region plants that it serves.
Wood pellets produced at our Sampson, Hamlet and Greenwood plants are terminaled at our Wilmington terminal. The Wilmington terminal accommodates Handysize, Supramax and Panamax-sized vessels, and has a receiving system that accommodates deliveries by truck and rail, a highly automated conveying system and two wood pellet storage domes with capacities of 45,000 MT each. The Wilmington terminal’s storage and loading capacity is more than adequate to store and facilitate the loading of wood pellets produced at our Sampson, Hamlet and Greenwood plants and its location decreases transportation time and costs through the entire supply chain. We benefit from preferential berth access and loading at our Wilmington terminal, which minimizes costs of shipping and logistics without need for excess storage.
Wood pellets produced at our Amory plant are transported by barge to the Mobile terminal for storage, handling and export pursuant to a short-term services agreement. (b) The Mobile terminal is a privately owned and maintained deep-water, multi-berth terminal that operates 24 hours per day, seven days per weekweek.
(c) We are currently constructing a deep-water marine terminal at the Port of Pascagoula, Mississippi; throughput capacity and is the fleeting and loading point for production from our Amory plant. The Amory plant is sited along a major inland waterway that makes transportation to the Mobile terminal easy and efficient, thereby reducing emissions and costs. Our ability to store our wood pellets in barges provides a capital-light, flexible solution that accommodates the storage needs of the Amory plant.
Wood pellets from our Cottondale plant are transported by short‑line rail to the Panama City terminal, where we store up to 32,000 MT of wood pellet inventory in a warehouse at Port Panama City. Production from the Cottondale plant is received, stored and loaded under a long‑term terminal services agreement with the Panama City Port Authority and a stevedoring contract, each of which runs through September 2023 and may be extended by us for an additional five-year period.
Wood pellets produced by our Waycross plant are transported by rail to the Savannah terminal, which has two wood pellet storage domes with a combined storage capacity of 50,000 MT, for storage, handling and export pursuant to arepresents projected capacity after construction.
(d) We lease and associated terminal services agreement that are effective through 2028.
Please read Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments” for more information regarding our plants, terminals and other long‑lived assets.certain real property at North Carolina State Port Authority’s Wilmington, North Carolina marine terminal.
Our Contracts
We refer to the structure of our long-term sales contracts as “take-or-pay” because they include a firm obligation of the customer to take a fixed quantity of product at a stated price and provisions for us to be compensated in the event of athe customer’s failure to accept all or a part of the contracted volumes or for termination of a contract by athe customer. Our long-term sales contracts typically provide for annual inflation-based adjustments or price escalators. Certain of our long-term sales contracts also contain provisions that allow us to increase or decrease the volume of product that we deliver by a percentage of the base annual volume, as well as cost pass-through mechanisms related to stumpage, fuel or transportation costs (including pricing fluctuations in bunker fuel) and price adjustments based on actual product specifications. In addition, many of our long-term sales contracts provide for cost recovery and sharing arrangements in connection with certain changes in law or sustainability requirements as well as payments to us in the case of their termination as a result of such changes. In order to mitigate volatility in our shipping costs, we have entered into fixed-price shipping contracts with reputable shippers to form a shipping portfolio matching the terms and volumes of our sales contracts for which we are responsible for arranging shipping.
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We also have entered into several other contracts that have smaller off-take quantities than the contracts described above. We continue to diversifyIn total, as of February 1, 2022, our customer base; however,backlog of fully contracted volumes under our largest customer accounted for 40%existing take-or-pay contracts is $21.2 billion with a weighted-average remaining contract term of our product sales14.5 years.Included in 2020the backlog are contracts with 16 customers in jurisdictions ranging from the U.K., Denmark, the Netherlands, Belgium, and based on our current contract backlog, our largest customer will account for 20% of our product sales in 2025.Japan.
In some cases, we may purchase shipments of product from third-party suppliers and resell them in back-to-back transactions. We determined that we are the principal in such transactions because we control the pellets prior to transferring them to the customer and therefore we recognize the related revenue on a gross basis in product sales.
In some instances, a customer may request to cancel, defer or accelerate a shipment, in which case we seek to optimize our position by selling or purchasing the subject shipment to or from another party, including in some cases a related party, either within our contracted off‑take portfolio or as an independent transaction in the spot market. In most instances, the original customer pays us a fee, including reimbursement of any incremental costs, which is included in other revenue. Other revenue also includes certain sales and marketing, scheduling, sustainability, consultation, shipping and risk management services (collectively, the “Commercial Services”) that are outside of the scope of an existing take-or-pay off-take contract.
We also provide terminaling services for third- and related-party wood pellet producers as well as for owners of other dry-bulk commodities.
The following chart presents information relating to our and our sponsor’s long-term, take-or-pay off-take contracts:
eva-20201231_g1.jpg

(1)    Represents the Partnership’s sales in 2020.
(2)    As of February 1, 2021, excluding volumes under the contracts between long-term off-take customers and our sponsor.
(3)    As of February 1, 2021, includes all volumes under the firm and contingent off-take contracts held by us and our sponsor. Although we expect to have the opportunity to acquire these contracts from our sponsor there can be no guarantee that we will acquire these, or any, contracts from our sponsor.
With our existing long-term, take-or-pay off-take contracts, all of the current production capacity of our production plants is fully contracted through 2025. As our current off-take contracts expire, we will seek to re-contract our capacity with a combination of renewals with existing customers, the assumption of additional contracts from our sponsor and the entry into contracts with new customers.
Contracted backlog
As of February 1, 2021, we had approximately $14.6 billion of product sales backlog for firm and contingent contracted product sales to our long-term off-take customers with a total weighted-average remaining term of 12.8 years. Contracted backlog represents the revenue to be recognized under existing contracts assuming deliveries occur as specified in the contracts. Contracted future product sales denominated in foreign currencies, excluding revenue hedged with foreign currency forward contracts, are
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included in U.S. Dollars at February 1, 2021 forward rates. The contracted backlog includes forward prices including inflation, foreign currency and commodity prices. The amount also includes the effects of related foreign currency derivative contracts.
Our expected future product sales revenue under our contracted backlog as of February 1, 2021 is as follows (in millions):
Period from February 1, 2021 to December 31, 2021$1,033 
Year ending December 31, 20221,274 
Year ending December 31, 2023 and thereafter12,284 
Total product sales contracted backlog$14,591 
Assuming all volumes under the firm and contingent off-take contracts held by our sponsor were included with our product sales backlog for firm and contingent contracted product sales, the total weighted-average remaining term as of February 1, 2021 would increase to 14.0 years and product sales contracted backlog would increase to $19.9 billion as follows (in millions):
Period from February 1, 2021 to December 31, 2021$1,032 
Year ending December 31, 20221,325 
Year ending December 31, 2023 and thereafter17,537 
Total product sales contracted backlog$19,894 
Included in the product sales contracted backlog above are $2.9 billion of contingent contracts held by our sponsor.
Industry Overview
Our product, utility-grade wood pellets, is used in an increasing variety of applications around the world to help reduce the life-cycle greenhouse gas emissions generated by our customers in energy generation and industrial processes.
For many of our customers, our wood pellets are used as a substitute for coal in both dedicated and co-fired power generation and combined heat and power plants. It enables major power, heat or combined heat and power generators (“generators”) to profitably generate electricity and heat in a manner that reduces the overall cost of compliance with certain mandatory greenhouse gas (“GHG”) emissions limits and renewable energy targets while also allowing countries to diversify their sources of electricity supply.
Unlike intermittent sources of renewable generation like wind and solar power, wood pellet-fired plants are capable of meeting baseload electricity demand and are dispatchable (that is, power output can be switched on or off or adjusted based on demand). As a result, utilities and major generators in Europe, Asia and other areas have made and continue to make long-term, profitable investments in power plant conversions and new builds of generating assets that either co-fire wood pellets with coal or are fully dedicated wood pellet-fired plants. Such developments help generators maintain and increase baseload generating capacity and comply with binding climate change regulations and other emissions reduction targets.
The capital costs required to convert a coal plant to co-fire biomass, or to burn biomass exclusively, are a fraction of the capital costs associated with implementing offshore wind and most other renewable technologies. Furthermore, the relatively quick process of converting coal-fired plants to biomass-fired generation can be an attractive benefit for generators whose generation assets are no longer viable as coal plants due to the expiration of operating permits, regulatory phase-out of coal-fired power generation, the introduction of taxes, or other restrictions on fossil fuel usage or emissions of GHGs and other pollutants.
There also continues to be significant demand growth in the EuropeanEurope and Asian demandAsia for wood pellets as a preferred fuel source and renewable alternative to fossil fuels for district heating loops, for heating homesresidential and commercial buildingsheating, and for the production of process heat for industrial sites.
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Increasingly, wood pellets are also being sought by hard-to-abate sectors to be used as bio-based raw material inputs to displace inputs to industrial processes formerly provided by fossil fuels. In addition to the customer applications outlined above, we have long-term, take-or-pay off-take contracts in place with customers who will utilize our wood pellets as a raw material input for bio-based substitutes for traditional fossil fuel-based fuelsin the refinement of bio-liquids like biodiesel and chemicals.sustainably produced aviation fuel as well as heavy industrial manufacturing like lime, steel, and cement. As these markets further develop, we believe we will continue to have opportunities to serve this growing material demand beyond our current product sales backlog.
Competition
We compete with other utility-grade wood pellet producers for long-term, take-or-pay off-take contracts with major power and heat generation customers, trading houses, and trading houses.increasingly with customers in hard-to-abate sectors. Competition in our industry is based on the price, quality, and consistency of the wood pellets produced, the reliability of wood pellet deliveries and the producer’s ability to verify and document, through customer and third-party audits, that itstheir wood pellets meet the regulatory sustainability, obligationsand use requirements of a particular customer.
Most of the world’s current wood pellet production plants are owned by small, private companies, with few companies owning or operating multiple plants. Few companies have the scale, production, technical expertise, access to sustainable fiber baskets, or commercial infrastructure necessary to supply utility-grade wood pellets under large, long-term off-take contracts with generators.
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to creditworthy counterparties. We are the largest producer by production capacity and consider other companies with comparable scale, technical expertise, or commercial infrastructure to be our competitors, including AS Graanul Invest, Pinnacle Renewable Energy Inc., Drax Biomass Inc., Fram Renewable Fuels, LLC, and Highland Pellets LLC and Pacific BioEnergy Corporation.LLC.
Our Relationship with Our SponsorDevelopment Projects
The Riverstone Funds became the majority owners ofDemand for our sponsor in March 2010. product continues to exceed available supply, industry-wide.In 2020, following a reorganization, certain affiliates of Riverstone, Riverstone Echo Continuation Holdings, L.P. and Riverstone Echo Rollover Holdings, L.P. became the majority owners of our sponsor.
We entered into a purchase rights agreement with our sponsor pursuantorder to which our sponsor agreed to provide us with a right of first offer to purchase any wood pellet production plant or deep‑water marine terminal that it, its subsidiaries or any other entity that it controls, owns and proposes to sell (each, a “ROFO Asset”)meet growing demand, we identify potentially attractive new locations for a five-year period. Pursuant to an amendment, the term of the purchase rights agreement was extended to May 2021 and will automatically renew on an annual basis unless either party provides notice of termination within 60 days prior to the end of the then-current term.
We will have 30 days following receipt of notice of our sponsor entity’s intention to sell a ROFO Asset to propose an offer for the ROFO Asset. If we submit an offer, our sponsor will negotiate with us exclusively and in good faith to enter into a letter of intent or definitive documentation for the purchase of the ROFO Asset on mutually acceptable terms. If we are unable to agree to terms within 45 days, our sponsor entity will have 150 days to enter into definitive documentation with a third party purchaser on terms that are, in the good faith judgment of our sponsor entity selling such ROFO Assets, superior to the most recent offer proposed by us.
We expect to continue to pursue the acquisition of such assets from our sponsor to the extent they are supported by long-term off-take contracts with creditworthy counterparties and have long useful lives, stable cost positions and advantaged locations.
Our sponsor owns approximately 34% of our common units and 100% of our General Partner. Our sponsor owns all of our incentive distribution rights, which entitle our sponsor to increasing percentages of our cash distributions above certain targets. As a result, our sponsor is incentivized to facilitate our access to accretive acquisition and organic growth opportunities, including those pursuant to the purchase rights agreement.
Our sponsor is developing and constructing certain wood pellet production, and terminaling assets in the Southeastern United States. Although we expect to continue to have the opportunity to acquire assets, including from our sponsor, our sponsor may not complete their development projects,deep-water terminal operations, and our sponsor may not decide to sell assetssecure control or completed development projects to us.
Our Sponsor’s Assetsownership of these sites.The process of developing these sites includes permitting, designing, engineering, and Development Projects
Our sponsor isultimately constructing, acommissioning, and operating new wood pellet production plant in Lucedale, Mississippior terminaling capacity consistent with our “build and a deep-water marine terminal in Pascagoula, Mississippi. In addition,copy” strategy, whereby we replicate production, and terminaling assets consistent with the design and equipment selection of our sponsor isthen-current operating assets. We are currently developing a fully contracted wood pellet production plant in Epes, Alabama, along with other siteswhich is designed and permitted to produce more than one million MTPY of wood pellets, and a potential plant site in Bond, Mississippi, and Alabama. Our sponsor employsmaintain a “build and copy” approach to constructing production plants and terminals, allowing synergiesportfolio of common processes and operational knowledge. We expect to have the opportunity to acquire assets and off-take contracts from our sponsor.12 additional sites under consideration.
Governmental Regulations
Our operations are subject to stringent and comprehensive federal, state, and local laws and regulations governing matters including protection of the environment and natural resources, occupational health and safety, and the release or discharge of materials into the environment, including air emissions. Such laws and regulations may require us to obtain permits, limit or avoid certain operational practices, and incur costs for compliance or remediation. Failure to comply with such laws may also result in substantial liabilities, including possible fines and penalties, for unpermitted emissions or discharges from our operations. Failure to comply with these laws and regulations may result in the assessment of administrative, civil, and criminal penalties, the imposition of investigatory and remedial obligations, and the issuance of orders enjoining some or all of our operations in affected areas.
Moreover, the global trend in environmental regulation is towards increasingly broad and stringent requirements for activities that may affect the environment. Any changes in environmental laws and regulations or re‑interpretation of enforcement policies that result in more stringent and costly requirements could have a material adverse effect on our operations and financial position. Although we monitor environmental requirements closely and budget for the expected costs, actual future expenditures may be different from the amounts we currently anticipate spending. Moreover, certain environmental laws impose strict joint and several liability for costs to clean up and restore sites where pollutants have been disposed or otherwise spilled or released, potentially resulting in significant costs and liabilities for remediation of resulting damage to property, natural resources, or persons. Although
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we believe that our competitors face similar environmental requirements, market factors may prevent us from passing on any increased costs to our customers. Additionally, although we believe that continued compliance with existing requirements will not materially adversely affect us, there is no assurance that the current levels of regulation will continue in the future.
The following summarizes some of the more significant existing environmental, health, and safety laws and regulations applicable to our operations, the failure to comply with which could have a material adverse impact on our capital expenditures, results of operations and financial position.
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Air Emissions
The federal Clean Air Act, as amended (the “CAA”), and state and local laws and regulations that implement and add to CAA requirements, regulate the emission of air pollutants from our facilities. The CAA and state and local laws and regulations impose significant monitoring, testing, recordkeeping and reporting requirements for these emissions. These laws and regulations require us to obtain pre-approval for the construction or modification of certain projects or facilities expected to produce or significantly increase air emissions, obtain and strictly comply with stringent air permit emission limits, and in certain cases utilize specific equipment or technologies to control and measure emissions. Obtaining these permits can be both costly and time intensive and has the potential to delay opening of new plants or significant expansion of existing plants; moreover, complying with these permits, including satisfying testing requirements, can be costly and time-intensive. Failure to comply with these laws, regulations and permit requirements may cause us to face fines, penalties or injunctive orders in connection with air pollutant emissions from our operations.
The CAA requires that we obtain various construction and operating permits, including, in some cases, Title V air permits. In certain cases, the CAA requires us to incur capital expenditures to install air pollution control devices at our facilities. We are also required to control fugitive emissions from our operations and may face fines, penalties or injunctive orders in connection with fugitive emissions. We have incurred, and expect to continue to incur, substantial administrative, operating and capital expenditures to maintain compliance with CAA requirements that have been promulgated or may be promulgated or revised in the future.
Climate Change and Greenhouse Gases
Our operations are subject to limited direct regulation with respect to emissions of GHGs. For example, at this time, the U.S. Environmental Protection Agency (the “EPA”) requires certain large facilities to undergo CAA pre-construction review and obtain operating permits for their GHG emissions. Our operations are also indirectly affected by regulations regarding the carbon treatment of biomass. Several jurisdictions to which we ship our product have imposed regulations on the characterization of biomass as a carbon-neutral fuel, and any change that imposes more stringent regulations on the characterization of biomass as carbon-neutral could negatively impact demand for our products or require us to incur additional costs to achieve such characterization of our products. For more information, see our risk factor titled “Changes in the treatment of biomass could adversely impact our business.” Additionally, the SEC has announced its intention to promulgate rules requiring climate disclosures. Although the form and substance of such requirements is not yet known, they could result in additional compliance costs. Finally, scientists have concluded that increasing concentrations of GHGs in the earth’s atmosphere may produce climate changes that have significant physical effects, such as sea-level rise, increased frequency and severity of storms, floods and other climatic events, including forest fires. If any such effects were to occur, they could have an adverse effect on our operations.
Safety and Maintenance
We are subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act, as amended (“OSHA”), and comparable state statutes, whosethe purpose of which is to protect the health and safety of workers. OSHA regulations impose various requirements, including with respect to training, policies and procedures and maintenance. In addition, the OSHA hazard communication standards in the Emergency Planning and Community Right-to-Know Act and comparable state statutes require that information be maintained concerning hazardous materials used or produced in our operations and that this information be provided to employees, state and local governmental authorities and citizens. National Fire Protection Association (NFPA) standards for combustible dust require our facilities to incorporate pollution control equipment such as cyclones, baghouses and electrostatic precipitators to minimize regulated emissions. Our deep-water marine terminals must also adhere to Homeland Security/U.S. Coast Guard regulations regarding physical security and emergency response plans. We continually strive to maintain compliance with applicable air, solid waste and wastewater regulations; nevertheless, we cannot guarantee that serious accidents will not occur in the future.
Seasonality
Our business is affected by seasonal fluctuations. The cost of producing wood pellets tends to be higher in the winter months because of increases in the cost of delivered raw materials, primarily due to a reduction in accessibility during cold and wet
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weather conditions. Our raw materials typically have higher moisture content during this period, resulting in a lower product yield; moreover, the cost of drying wood fiber increases during periods of lower ambient temperatures.
The increasetemperatures given greater energy required in demand for power and heat during the winter months drives greater customer demand for wood pellets. As someprocess of our wood pellet supply to our customers is sourced from third-party purchases, we may experience higher wood pellet costs and a reduction in our gross margin during the winter months.heating.
Human Capital
We do notbelieve our employees are our greatest asset and their safety is our top priority. We have any employees. We are partybeen unrelenting in our commitment to management services agreements (the “MSAs”) with Enviva Management Company, pursuant to which Enviva Management Company provides us with the employees, managementhealth and services necessary for the operationsafety of our business.employees. Moreover, we continue to work to build diversity and inclusion among our
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employees and other stakeholders and making a long-lasting, positive impact in the communities in which we operate. As a company, we value keeping promises, acting with integrity, the determination to make a difference and the qualities of openness, humility and respect.
Through our human resources practices, we focus on attracting, developing and retaining talent to help enable our growth consistent with our values. In addition, we apply a talent framework to support our human resources objectives of recruiting and nurturing top talent, strengthening our succession planning to develop a pipeline of future leaders for key roles and driving a culture of accountability through a robust performance management process.
We had 1,196 employees as of December 31, 2020,2021. None of our employees are represented by a labor union. We have not experienced any employment-related work stoppages, and we consider relations with our employees to be good.
People make Enviva, Management Company had 1,135and safety of our People has been our top priority since the first days of our business and is part of the company’s DNA. Maintaining safety in our daily 24/7 operations amongst the challenges of the COVID-19 pandemic brought Enviva’s best minds, systems, processes, and team back-up culture, together. Enviva finished 2021 with a Total Recordable Incident Rate of .91 compared to an industry average of 3.0.
We focus on attracting, developing, and retaining a team of highly talented and motivated employees. We refer to the employees of Enviva Management Company asoffer our employees competitive pay and benefits including paid time off, multiple healthcare and insurance coverage options including premium free offerings, paid company holidays, and a 401(k) retirement plan. Employee performance is measured in part based on goals that are aligned with our annual objectives, and we recognize that our success is based on the talents and dedication of those we employ. Additionally, we look to support our employees both on and off the job site by offering benefits such as paid parental leave, a wellness reimbursement program, FSA dependent care, paid disability (short term/long term), and educational assistance. All of our full-time employees are bonus eligible and 20% of our employees are currently eligible for equity-based awards under our LTIP. We evaluate these programs annually to ensure our employees are compensated fairly and competitively.
In 2021, our commitment to career growth and development led us to deploy various in-person and online courses and presentations to give employees the opportunity to learn new skills, hone existing ones and deepen their understanding of our business as well as expose them to new ideas that challenge their way of thinking. We offered 20 technical skill trainings for our operators in our plants. We hosted our annual program called Enviva Days which is a development initiative focused on driving career development and employee engagement. In 2021, this event included 15 learning sessions over the course of one week. More than 500 Enviva employees participated from across 3 continents, 4 countries, and 7 U.S. states.
To achieve operational discipline in our hiring efforts, we follow a consistent hiring process across the organization. We recognize the need to fill roles and strive for a time-to-fill rate that aligns with internal benchmarks. Our current hiring process includes a pre-screen interview and cross-functional panel interview. Following recruitment, our onboarding program provides our new hires with the tools and information needed to succeed. These processes helped us maintain a total voluntary turnover rate of 27%.
We are an equal opportunity employer with a commitment to diversity and inclusion. We believe in a workplace that promotes equality, transparency and accountability. Our policies and procedures seek to foster these values through regular trainings and employee engagement, such as annual report. Please read Part II, Item 13. “Certain Relationshipstrainings for 100% of our employees on workplace conduct and Related Transactions,non-discrimination. We strive to engage with the local communities where our operations are based so that we can locate and Director Independence—Other Transactions with Related Persons—Management Services Agreement” for moresupport a diverse talent pool.
Additional information regarding our MSAs with Enviva Management Company.human resources initiatives can be found under the “People” section of our 2020 Corporate Responsibility Report which can be found on our website.
Principal Executive Offices
Our principal executive offices are located at 72007272 Wisconsin Avenue, Suite 1000,1800, Bethesda, Maryland 20814.
Available Information
We file annual, quarterly and current reports and other documents with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The SEC maintains a website at www.sec.gov that contains reports and other information regarding issuers that file electronically with the SEC.
We also make available free of charge our Annual Reports on Form 10‑K, Quarterly Reports on Form 10-Q, Current Reports on Form 8‑K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, simultaneously with or as soon as reasonably practicable after filing such materials with, or furnishing such materials to, the SEC and on or through our website, www.envivabiomass.com. The information on our website, or information about us on any other website, is not incorporated by reference into this Annual Report.
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ITEM 1A.    RISK FACTORS
There are many factors that could have a material adverse effect on our business, financial condition, results of operations and cash available for distribution.dividends. New risks may emerge at any time and we cannot predict those risks or estimate the extent to which they may affect financial performance. Each of the risks described below could adversely impact the value of our common units.stock.
Summary Risk Factors
Our business is subject to numerous risks and uncertainties, including those described in this Item 1A “Risk Factors.” These risks include the following:
We may not have sufficient cash from operations following the establishment of cash reservesThe Company’s ability to declare and payment of costspay dividends, and expenses, including cost reimbursementsrepurchase shares is subject to our General Partner and its affiliates, to enable us to pay quarterly distributions to our unitholders at our current distribution rate.certain conditions.
We will derive substantially all our revenues from six customers in 2021,2022, five of which are located in Europe. If we fail to continue to diversify our customer base, our results of operations, business and financial position, and ability to pay distributionsdividends to our unitholdersstockholders could be materially adversely affected.
Changes in laws or government policies, incentives and taxes related to low-carbon and renewable energy may affect customer demand for our products.
Challenges to or delays in the issuance of air permits, or our failure to comply with our permits, could impair our operations and ability to expand our production.
Federal, state, and local legislative and regulatory initiatives relating to forestry products and the potential for related litigation could result in increased costs, and/orand additional operating restrictions and delays, which could cause a decline in the demand for our products and negatively impact our business, financial condition and results of operations.
Increasing attention to environmental, social, and governance (“ESG”) matters, including our net-zero goals or our failure to successfully achieve such goals, could adversely affect our business.
We may be unable to complete our construction projects on time, and our construction costs could increase to levels that make the return on our investment less than expected.
The satisfactory delivery of substantially all of our production is dependent on continuous access to infrastructure at our owned, leased and third-party-operated terminals. Loss of access to our ports of shipment and destination, including through failure of terminal equipment and port closures, could adversely affect our financial results and cash available for distribution.flows.
Failure to maintain effective quality control systems at our production plants and deep-water marine terminals could have a material adverse effect on our business and operations.
Our business is subject to operating hazards and other operational risks, which may have a material adverse effect on our business and results of operations. We may also not be adequately insured against such events.
Significant increases in the cost, or decreases in the availability, of raw materials or sourced wood pellets could result in lower revenue, operating profits, and cash flows, or impede our ability to meet commitments to our customers.
We are exposed to the credit risk of our contract counterparties, including the customers for our products, and any material nonpayment or nonperformance by our customers could adversely affect our financialbusiness and results and cash available for distribution.of operations.
The international nature of our business subjects us to a number of risks, including foreign exchange risk and unfavorable political, regulatory, and tax conditions in foreign countries.
Enviva Holdings, LP ownsChanges to applicable tax laws and controls our General Partner, which has sole responsibility for conductingregulations or exposure to additional income tax liabilities could affect our business, cash flows, and managing our operations. Our General Partner and its affiliates, including Enviva Holdings, LP, have conflicts of interest with us and limited duties, and they may favor their own interests to our detriment and that of our unitholders.future profitability.
The board of directors of our General PartnerWe may modify or revoke our cash distribution policy at any time at its discretion. Our partnership agreement does not require us to pay any distributions at all.
Our partnership agreement eliminates and replaces our General Partner’s fiduciary duties to holders of our units.issue additional shares without stockholder approval, which would dilute existing stockholder ownership interests.
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Our partnership agreement restricts the remedies available to holders of our units for actions taken by our General Partner that might otherwise constitute breaches of fiduciary duty.
Our sponsor has certain incentive distribution rights that reduce the amount of our cash available for distribution to our common unitholders.
Holders of our common units have limited voting rights and are not entitled to elect our General Partner or its directors.
We may issue additional units without unitholder approval, which would dilute existing unitholder ownership interests.
The New York Stock Exchange (the “NYSE”) does not require a publicly traded partnership like us to comply with certain of its corporate governance requirements.
Our tax treatment depends on our status as a partnership for federal income tax purposes and not being subject to a material amount of entity‑level taxation. If the Internal Revenue Service (“IRS”) were to treat us as a corporation for federal income tax purposes, or we become subject to entity‑level taxation for state tax purposes, our cash available for distribution to our unitholders would be substantially reduced.
The tax treatment of publicly traded partnerships or an investment in our units could be subject to potential legislative, judicial or administrative changes or differing interpretations, possibly applied on a retroactive basis.
Even if unitholders do not receive any cash distributions from us, unitholders will be required to pay taxes on their share of our taxable income.
Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences to them.
Risks Related to Our Business
We may not have sufficient cash from operations following the establishment of cash reserves and payment of costs and expenses, including cost reimbursements to our General Partner and its affiliates, to enable us to pay quarterly distributions to our unitholders at our current distribution rate.
We may not have sufficient cash each quarter to enable us to pay quarterly distributions at our current distribution rate. The amount of cash we can distribute on our common units principally depends on the amount of cash we generate from our operations, which fluctuates from quarter to quarter based on various factors, some of which are beyond our control, including the following:
the volume and quality of wood pellets that we are able to produce or source and profitably sell, which could be adversely affected by, among other things, operating or technical difficulties at our plants or terminals;
the prices at which we are able to sell our products;
the ability and willingness of our customers to fully perform under our off-take agreements;
our ability to successfully negotiate, complete and integrate assets and business or to realize the anticipated benefits of such acquisitions, as well as our ability to organically expand our operations in a cost-effective manner;
the level of competition from other wood pellet producers and suppliers of competing sources of fuel for heat and power generation, as well as the price and availability of such competing sources; and
the impact of prevailing regional economic and regulatory conditions in the areas in which we and our customers operate.
In addition, the actual amount of cash we have available for distribution depends on other factors, some of which are beyond our control, including the level of capital expenditures we make, fluctuations in our working capital needs, our cost of capital and ability to access the capital markets, fluctuations in interest rates, our debt service requirements and other liabilities, restrictions contained in our existing or future debt agreements and the amount of cash reserves established by our General Partner.
We will derive substantially all our revenues from six customers in 2021,2022, five of which are located in Europe. If we fail to continue to diversify our customer base, our results of operations, business and financial position and ability to pay distributionsdividends to our unitholdersstockholders could be materially adversely affected.
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Our contracts with Drax, Lynemouth Power, MGT, RWE, Ørsted, and Sumitomo, five of which are located in Europe, will represent substantially all of our product sales volumes in 2021;2022; as a result, we face counterparty and geographic concentration risk. The ability of each of our customers to perform its obligations under a contract with us will depend on a number of factors that are beyond our control and may include the overall financial condition of the counterparty, the counterparty’s access to capital, the condition of the regional and global power, heat and combined heat and power generation industry, continuing regulatory and economic support for wood pellets as a fuel source, spot market pricing trends and general economic conditions. In addition, in depressed market conditions, our customers may no longer need the amount of our products they have contracted for or may be able to obtain comparable products at a lower price. If economic, political, regulatory or financial market conditions in Europe deteriorate and/or our customers experience a significant downturn in their business or financial condition, they may attempt to renegotiate, reject or declare force majeure under our contracts. Should any counterparty fail to honor its obligations under a contract with us, we could sustain losses, which could have a material adverse effect on our business, financial condition, results of operations and cash available for distribution.dividends. We may also decide to renegotiate our existing contracts on less favorable terms and/or at reduced volumes in order to preserve our relationships with our customers.
Upon the expiration of our off-take contracts, our customers may decide not to recontract on terms as favorable to us as our current contracts, or at all. For example, our current customers may acquire wood pellets from other providers that offer more competitive pricing or logistics or develop their own sources of wood pellets. Some of our customers could also exit their current business or be acquired by other companies that purchase wood pellets from other providers. The demand for wood pellets or their prevailing prices at the times at which our current off‑take contracts expire may also render entry into new long-term-off-take contracts difficult or impossible.
Any reduction in the amount of wood pellets purchased by our customers or our inability to renegotiate or replace our existing contracts on economically acceptable terms, or our failure to successfully penetrate new markets within and outside of Europe in the future, could have a material adverse effect on our results of operations, business and financial position, as well as our ability to pay distributionsdividends to our unitholders.stockholders.
Termination penalties within our off-take contracts may not fully compensate us for our total economic losses.
Certain of our off-take contracts provide the customer with a right of termination for various events of convenience or changes in law or policy. Although some of these contracts are subject to certain protective termination payments, the termination payments made by our customers may not fully compensate us for losses. We may be unable to re-contract our production at favorable prices or at all, and our results of operations, business and financial position, and our ability to pay distributionsdividends to our unitholders,stockholders, may be materially adversely affected as a result. Currently, we derive substantially all of our revenues from customers in Europe. If we fail to continue to diversify our customer base geographically within and outside of Europe in the future, our results of operations, business and financial position and ability to pay distributionsdividends to our unitholdersstockholders could be materially adversely affected.
Our long-term off-take contracts with our customers may only partially offset certain increases in our costs or preclude us from taking advantage of relatively high wood pellet prices in the broader markets.
Our long-term off-take contracts typically set base prices subject to annual price escalation and other pricing adjustments for changes in certain of our underlying costs of operations, including, in some cases, for stumpage or diesel fuel. However, such cost pass-through mechanisms may only pass a portion of our total costs through to our customers. If our operating costs increase significantly during the terms of our long-term off-take contracts beyond the levels of pricing and cost protection afforded to us under the terms of such contracts, our results of operations, business and financial position, and ability to pay distributionsdividends to our unitholders,stockholders, could be adversely affected.
Moreover, during periods when the prevailing market price of wood pellets exceeds the prices under our long-term off-take contracts, our revenues could be significantly lower than they otherwise would have been were we not party to such contracts for substantially all our production. In addition, our current and future competitors may be in a better position than we are to take advantage of relatively high prices during such periods.
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The growth of our business depends in part on locating, developing, and acquiring interests in additional wood pellet production plants and marine terminals at favorable prices.
Our business strategy includes growing our business through drop‑downconstruction, and greenfield facilities, and third-party acquisitions that increase our cash generated from operations and cash available for distribution on a per-unit basis.operations. Various factors could affect the availability of attractive projects to grow our business, including:
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our sponsor’s failure to complete its development projects in a timely manner or at all, which could result from, among other things, permitting challenges, failure to procure requisite financing or equipment, construction difficulties or an inability to obtain off‑take contracts on acceptable terms;
our sponsor’s failure to offer its assets for sale;
our inability to exercise our right of first offer with respect to any asset that our sponsor offers to us; and
fewer accretive third‑party acquisition opportunities than we expect, which could result from, among other things, available projects having less desirable economic returns, competition, anti‑trust concerns, or higher risk profiles than we believe suitable for our business plan and investment strategy.
Any of these factors could prevent us from executing our growth strategy or otherwise could have a material adverse effect on our results of operations, business and financial position, and our ability to pay distributionsdividends to our unitholders.stockholders.
AnyWe may be unable to make attractive acquisitions, and any acquisitions we make may reduce, rather than increase,will be subject to substantial risks that could adversely impact our cash generated from operations on a per-unit basis.business.
We may consummate acquisitions we believe will be accretive,attractive, but result in a decrease in our cash available for distributionflow from operating activities per unit.share. Any acquisition involves potential risks, some of which are beyond our control, including:
mistaken assumptions about revenues and costs, including synergies;
the inability to successfully integrate businesses we acquire;
the inability to hire, train or retain qualified personnel to manage and operate our business and newly acquired assets;
the assumption of unknown liabilities;
limitations on our access to indemnification from the seller;
incorrect assumptions about the overall costs of equity or debt;
the diversion of management’s attention to other business concerns;
unforeseen difficulties in connection with operating newly acquired assets or in new geographic areas;
customer or key employee losses at acquired businesses; and
the inability to meet obligations in off‑take or other contracts associated with acquisitions.
If we consummate any future acquisitions, our capitalization and results of operations may change significantly, and unitholdersour stockholders will not have the opportunity to evaluate the economic, financial, and other relevant information that we will consider in determining the application of our funds, and other resources to acquisitions.
The Company's ability to declare and pay dividends, and repurchase shares is subject to certain considerations.
Dividends are authorized and determined by the Company's board of directors in its sole discretion. Decisions regarding the payment of dividends and the repurchase of shares are subject to a number of considerations, including:
cash available for dividends or repurchases;
the Company's results of operations and anticipated future results of operations;
the Company's financial condition, especially in relation to the anticipated future capital needs;
the level of cash reserves the Company may establish to fund future capital expenditures;
the Company's stock price; and
other factors the board of directors deems relevant.
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The Company can provide no assurance that it will continue to pay dividends or authorize share repurchases at the current rate or at all. Any elimination of or downward revision in the Company's dividend payout or stock repurchase program could have a material adverse effect on the market price of the Company's common stock.
Regulatory and Litigation Risks
Changes in laws or government policies, incentives and taxes related to low-carbon and renewable energy may affect customer demand for our products.
Consumers of utility-grade wood pellets currently use our products either as part of a binding obligation to generate a certain percentage of low-carbon energy or because they receive direct or indirect financial support or incentives to do so. Financial support is often necessary to cover the generally higher costs of wood pellets compared to conventional fossil fuels like coal. In most countries, once the government implements a tax (e.g., the U.K.’s carbon price floor tax) or a preferable tariff or specific renewable energy policy either supporting a renewable energy generator or the energy generating sector as a whole, such tax, tariff or policy is guaranteed for a specified period of time, sometimes for the investment lifetime of a generator’s project. However, governmental policies that currently support the use of biomass may adversely modify their tax, tariff or incentive regimes, and the future availability of such taxes, tariffs or incentive regimes, either in current jurisdictions beyond the prescribed timeframes or in new jurisdictions, is uncertain. Demand for wood pellets could be substantially lower than expected if government support is removed, reduced or delayed or, in the future, is insufficient to enable successful deployment of biomass power at the levels currently projected. In addition, regulatory changes such as new requirements to install additional pollution control technology could require us to curtail or amend operations to meet new greenhouse gas (“GHG”) emission limits. This may also affect demand for our products in addition to increasing our operational costs.
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Biomass energy generation requires the use of biomass that is derived from acceptable sources and is demonstrably sustainable. This typically is implemented through biomass sustainability criteria, which either are a mandatory element of eligibility for financial subsidies to biomass energy generators or will become mandatory in the future. For more information, see our risk factor titled “Changes in the treatment of biomass could adversely impact our business.” As a biomass fuel supplier, the viability of our business is therefore dependent on our ability to comply with such requirements. This may restrict the types of biomass we can use and the geographic regions from which we source our raw materials, and may require us to reduce the GHG emissions associated with our supply and production processes.
Currently, some elements of the criteria with which we must comply, including rules relating to forest management practices and carbon accounting, are under revision. Certain requirements, such as the regulations in place in jurisdictions from which we source biomass, may be beyond our ability to control. If different sustainability requirements are adopted in the future, demand for our products could be materially reduced in certain markets, and our results of operations, business and financial position, and our ability to pay distributionsdividends to our unitholders,stockholders, may be materially adversely affected.
Challenges to or delays in the issuance of air permits, or our failure to comply with our permits, could impair our operations and ability to expand our production.
Our plants are subject to the requirements of the Clean Air Act and must either receive minor source permits from the states in which they are located or a major source permit, which is subject to the approval of the EPA. In general, our facilities are eligible for minor source permits following the application of pollution control technologies. However, we could experience substantial delays with respect to obtaining such permits, including as a result of any challenges to the issuance of our permits or other factors, which could impair our ability to operate our wood pellet production plants or expand our production capacity. In addition, any new air permits we receive could require that we incur additional expenses to install emissions control technologies, limit our operations and impede our ability to satisfy emission limitations and/or stringent testing requirements to demonstrate compliance therewith. Failure to meet such requirements could have a material adverse effect on our results of operations, business and financial position, and our ability to pay distributionsdividends to our unitholders.stockholders.
Federal, state, and local legislative and regulatory initiatives relating to forestry products and the potential for related litigation could result in increased costs and/orand additional operating restrictions and delays, which could cause a decline in the demand for our products and negatively impact our business, financial condition, and results of operations.
Our raw materials are byproducts of traditional timber management and harvesting, principally low-value wood materials such as thinnings and the tops and limbs of trees that are generated in a harvest and industrial residuals (chips, sawdust and other wood industry byproducts). Commercial forestry is regulated by complex regulatory frameworks at the federal, state and local levels. Among other federal laws, the Clean Water Act and the Endangered Species Act have been applied to commercial forestry operations through agency regulations and court decisions, as well as through the delegation to states to implement and monitor compliance with such laws. State forestry laws, as well as land-use regulations and zoning ordinances at the local level,
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are also used to manage forests in the Southeastern United States, as well as other regions from which we may need to source raw materials in the future. Any new or modified laws or regulations at any of these levels could have the effect of reducing forestry operations in areas where we procure our raw materials and consequently may prevent us from purchasing raw materials in an economic manner, or at all. In addition, future regulation of, or litigation concerning, the use of timberlands, the protection of endangered species, the promotion of forest biodiversity and the response to and prevention of wildfires, as well as litigation, campaigns or other measures advanced by special interest groups, could also reduce the availability of the raw materials required for our operations.
Changes in the treatment of biomass could adversely impact our business.
Multiple regulatory agencies, including in jurisdictions where we sell our products, have noted that biomass can support a transition away from fossil fuels and towards a more sustainable energy sector. However, when poorly managed, use of biomass can be related to land conversion, biodiversity and GHG emissions. Therefore, various rules have been issued to regulate the sustainability claims associated with the use of biomass, which in turn may require us to adopt certain practices in our operations.
For example, the European Union has promulgated directives on renewable energy that, among other things, establish targets for renewable energy supply and establish certain sustainability requirements for biomass, including requirements related to carbon stocks and land use. If the wood pellets we produce do not conform to these or future requirements, our customers would not be able to count energy generated therefrom towards these renewable energy goals, which could decrease demand for our products. Biomass has been under additional regulatory scrutiny in recent years to develop standards to safeguard against adverse environmental effects from its use. Although regulators continue to consider biomass harvested with certain practices to be sustainable, certain special interest groups that focus on environmental issues have expressed their
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opposition to the use of biomass, both publicly and directly, to domestic and foreign regulators, policy makers, power, heat or combined heat and power generators (“generators”) and other industrial users of biomass. These groups are also actively lobbying, litigating and undertaking other actions domestically and abroad in an effort to increase the regulation of, reduce or eliminate the incentives and support for, or otherwise delay, interfere with or impede the production and use of biomass for or by generators. For example, several commentersIn response to such concerns, the EU’s proposed sustainable finance criteria for climate change mitigation and adaptation have encouraged the EU notBiden Administration withdrew from pre-publication review a pending rulemaking to classify the use of forest-relatedcharacterize biomass as sustainable. Such efforts, if successful,carbon-neutral for CAA purposes in the United States. While we do not currently sell a significant portion of our products in the United States, any changes in the treatment of biomass in jurisdictions where we sell or plan to sell our products could materially adversely affect our results of operations, business and financial condition, and our ability to pay distributionsdividends to our unitholders.stockholders.
Our operations are subject to stringent environmental and occupational health and safety laws and regulations that may expose us to significant costs and liabilities.
Our operations are subject to stringent federal, regional, state and local environmental, health and safety laws and regulations. These laws and regulations govern environmental protection, occupational health and safety, the release or discharge of materials into the environment, air emissions, wastewater discharges, the investigation and remediation of contaminated sites and allocation of liability for cleanup of such sites. These laws and regulations may restrict or impact our business in many ways, including by requiring us to acquire permits or other approvals to conduct regulated activities, limiting our air emissions or wastewater discharges or requiring us to install costly equipment to control, reduce or treat such emissions or discharges and impacting our ability to modify or expand our operations. We may be required to make significant capital and operating expenditures to comply with these laws and regulations. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, imposition of investigatory or remedial obligations, suspension or revocation of permits and the issuance of orders limiting or prohibiting some or all of our operations. Adoption of new or modified environmental laws and regulations may impair the operation of our business, delay or prevent expansion of existing facilities or construction of new facilities and otherwise result in increased costs and liabilities, which may be material.
The actions of certain special interest groups could adversely impact our business.
Certain special interest groups that focus on environmental issues have expressed their opposition to the use of biomass, both publicly and directly to domestic and foreign regulators, policy makers, power, heat or combined heat and power generators (“generators”) and other industrial users of biomass. These groups are also actively lobbying, litigating and undertaking other actions domestically and abroad in an effort to increase the regulation of, reduce or eliminate the incentives and support for, or otherwise delay, interfere with or impede the production and use of biomass for or by generators. Such efforts, if successful, could materially adversely affect our results of operations, business and financial condition, and our ability to pay distributionsdividends to our unitholders.stockholders.
Our
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Increasing attention to ESG matters, including our net-zero goals includingor our failure to achieve them,such goals, could adversely affect our business.
Increasing social and political attention to climate change and other environmental and social impacts may result in increased costs, changes in demand for certain types of products or means of production, enhanced compliance obligations, or other negative impacts to our business or our financial condition. Although we may participate in various voluntary frameworks and certification programs to improve the ESG profile of our operations and product, we cannot guarantee that such participation or certification will have the intended results on our ESG profile.
We recentlycreate and publish voluntary disclosures regarding ESG matters from time to time, but many of the statements in those voluntary disclosures are based on our expectations and assumptions, which may require substantial discretion and forecasts about costs and future developments. Such expectations and assumptions are also complicated by the lack of an established framework for identifying, measuring, and reporting on many ESG matters. Moreover, in February 2021, we announced our intention to become carbon-neutral in our operations by 2030 and to publicly report our progress against these goals.this goal. For more information, see “Recent Developments—Commitment to Achieve Carbon Neutral Operations.” Our estimates concerning the timing and cost of implementing our goals are subject to risks and uncertainties, some of which are outside of our control. We also may face greater scrutiny as a result of our announcement and publication of our progress, and our failure to successfully achieve our voluntary net-zero goals, or the manner in which we achieve some or any portion of our goals, could lead to adverse press coverage or other public attention. Moreover, despite these the voluntary nature of our net-zero goal, we may receive pressure from external sources, such as lenders, investors, or other groups, to adopt more aggressive climate or other ESG-related goals; however, we may not agree that such goals will be appropriate for our business, and we may not be able to implement such goals because of potential costs or technical or operational obstacles.
In addition, organizations that provide information to investors on corporate governance and related matters have developed rating processes on evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable ESG ratings could lead to increased negative investor sentiment toward us, our customers, or our industry, which could negatively impact our share price as well as our access to and cost of capital. Finally, to the extent ESG matters negatively impact our reputation, we may not be able to compete as effectively to recruit or retain employees, which may adversely affect our operations.
Operational Risks
We may be unable to complete our construction projects on time, and our construction costs could increase to levels that make the return on our investment less than expected.
Historically, we typically have acquired wood pellet production plants, marine export terminals and other assets that had already commenced commercial operations. In response to the increasing demand for our product, we have begun undertaking expansion projects at some of our plants to increase their production capacity or make other improvements.
We may face delays or unexpected developments in completing our current or future construction projects, including as a result of our failure to timely obtain the equipment, services or access to infrastructure necessary for the operation of our projects at budgeted costs, maintain all necessary rights to land access and use and/or obtain and/or maintain environmental and other permits or approvals. These circumstances could prevent our construction projects from commencing operations or from meeting our original expectations concerning timing, operational performance, the capital expenditures necessary for their completion and the returns they will achieve. Our inability to complete and transition our construction projects into financially successful operating projects on time and within budget could have a material adverse effect on our results of operations, business, and financial position, as well as our ability to pay distributions to our unitholders.
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and cash flows.
The satisfactory delivery of substantially all of our production is dependent on continuous access to infrastructure at our owned, leased and third-party-operated terminals. Loss of access to our ports of shipment and destination, including through failure of terminal equipment and port closures, could adversely affect our financial results and cash available for distribution.dividends.
Substantially all of our production is dependent on infrastructure at our owned, leased and third-party-operated ports. Should we suffer a catastrophic failure of the equipment at these ports or otherwise experience port closures, including for security or weather-related reasons, we could be unable to fulfill off‑take obligations or incur substantial additional transportation costs, which would reduce our cash flow. Moreover, we rely on various ports of destination, as well as third parties who provide stevedoring or other services at our ports of shipment and destination or from whom we charter oceangoing vessels and crews, to transport our product to our customers. Loss of access to these ports for any reason, or failure of such third-party service providers to uphold their contractual obligations, may impact our ability to fulfill our obligations under our off-take contracts, cause interruptions to our shipping schedule and cause us to incur substantial additional transportation or other costs, all of which could have a material adverse effect on our business, financial condition and results of operations.
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Failure to maintain effective quality control systems at our production plants and deep-water marine terminals could have a material adverse effect on our business and operations.
Our customers require a reliable supply of wood pellets that meet stringent product specifications. We have built our operations and assets to consistently deliver and certify the highest levels of product quality and performance, which is critical to the success of our business and depends significantly on the effectiveness of our quality control systems, including the design and efficacy of our quality control systems, the success of our quality training program and our ability to ensure that our employees and contract counterparties adhere to our quality control policies and guidelines. Moreover, any significant failure or deterioration of our quality control systems could impact our ability to deliver product that meets our customers’ specifications and, in turn, could lead to rejection of our product by our customers, which could have a material adverse effect on our business, financial condition and results of operations.
Our business is subject to operating hazards and other operational risks, which may have a material adverse effect on our business and results of operations. We may also not be adequately insured against such events.
Our business could be materially adversely affected by operating hazards and other risks to our operations. We produce a combustible product that may under certain circumstances present a risk of fires and explosions or other hazards. Moreover, severe weather, such as floods, earthquakes, hurricanes or other natural disasters, climatic phenomena, such as drought, and other catastrophic events, such as plant or shipping disasters, could impact our operations by causing damage to our facilities and equipment, affecting our ability to deliver our product to our customers and impacting our customers’ ability to take delivery of our products. Such events may also adversely affect the ability of our suppliers or service providers to provide us with the raw materials or services we require or the ability to load, transport and unload our product.
In addition, the scientific community has concluded that severe weather will increase in frequency and intensity as result of increasing concentrations of GHGs in the Earth’s atmosphere, and that climate change will have significant physical effects, including sea-level rise, increased frequency and severity of hurricanes and other storms, flooding, drought and forest fires. We and our suppliers operate in coastal and wooded areas in geographic regions that are susceptible to such climate impacts.
We maintain insurance policies to mitigate against certain risks related to our business, in types and amounts that we believe are reasonable depending on the circumstances surrounding each identified risk; however, we may not be fully insured against all operating hazards and other operational risks incident to our business. Furthermore, we may be unable to maintain or obtain insurance of the type and amount we desire at reasonable rates, if at all. As a result of market conditions and certain claims we may make under our insurance policies, premiums and deductibles for certain of our insurance policies could escalate. In some instances, insurance could become unavailable or available only for reduced amounts of coverage or at unreasonable rates. If we were to incur a significant liability for which we are not fully insured, it could have a material adverse effect on our financial condition, results of operations and cash available for distributiondividends to our unitholders.stockholders.
We may be required to make substantial capital expenditures to maintain and improve our facilities.
Although we currently use a portion of our cash reserves and cash generated from our operations to maintain, develop and improve our assets and facilities, such investment may, over time, be insufficient to preserve the operating profile required for us to meet our planned profitability or meet the evolving quality and product specifications demanded by our customers. Moreover, our current and future construction and other capital projects may be capital-intensive or suffer cost-overruns. Accordingly, if we exceed our budgeted capital expenditures and/or additional capital expenditures become necessary in the future and we are unable to execute our construction, maintenance or improvement programs successfully, within budget, and
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in a timely manner, our results of operations, business and financial position, and our ability to pay distributions to our unitholders,generate cash flows, may be materially adversely affected.
Our business and operating results are subject to seasonal fluctuations.
Our business is affected by seasonal fluctuations. The cost of producing wood pellets tends to be higher in the winter months because of increases in the cost of delivered raw materials, primarily due to a reduction in accessibility during cold and wet weather conditions. Our raw materials typically have higher moisture content during this period, resulting in a lower product yield; moreover, the cost of drying wood fiber increases during periods of lower ambient temperatures.
The increase in demand for power and heat during the winter months drives greater customer demand for wood pellets. As some of our wood pellet supply to our customers are sourced from third-party purchases, we may experience higher wood pellet costs and a reduction in our gross margin during the winter months. These seasonal fluctuations could have an adverse effect on our business, financial condition and results of operations and cause comparisons of operating measures between consecutive quarters to not be as meaningful as comparisons between longer reporting periods.
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We are exposed to construction and development risks related to our projects.
Historically, we acquired wood pellet production plants and marine export terminals that had either already commenced commercial operations or received financial support from our former sponsor to mitigate the risk associated with the construction and ramp of such assets. Following the Simplification Transaction, we will receive certain fixed payments from certain owners of our former sponsor associated with its existing obligations related to prior drop-downs and other transactions; however, such payments may be insufficient to fully compensate us for cost overruns, production delays, or other adverse developments. Furthermore, we remain exposed to the risks associated with our organic growth initiatives and will be fully exposed to the risks associated with any new development or construction activities.
We expect to experience an increase in capital expenditures and general and administrative expenses related to our development and construction activities, which may be substantial. We may face delays or unexpected developments in completing our current or future construction projects, including as a result of our failure to timely obtain the equipment, services or access to infrastructure necessary for the operation of our projects at budgeted costs, maintain all necessary rights to land access and use and obtain and maintain environmental and other permits or approvals. These circumstances could prevent our construction projects from commencing operations or meeting our original expectations concerning timing, operational performance, the capital expenditures necessary for their completion and the returns they will achieve. Moreover, design, development and construction activities associated with a project may occur over an extended period of time, but may generate little or no revenue or cash flow until the project is placed into commercial service. This mis-match in timing could reduce our available liquidity. Our inability to complete and transition our construction projects into financially successful operating projects on time and within budget or the failure of our projects to generate expected returns could have a material adverse impact our liquidity, results of operations, business and financial position, as well as our ability to pay dividends to our stockholders.
Market and Credit Risks
Significant increases in the cost, or decreases in the availability, of raw materials or sourced wood pellets could result in lower revenue, operating profits and cash flows, or impede our ability to meet commitments to our customers.
We purchase wood fiber from third-party landowners and other suppliers for use at our plants. Our reliance on third parties to secure wood fiber exposes us to potential price volatility and unavailability of such raw materials, and the associated costs may exceed our ability to pass through such price increases under our contracts with our customers. Further, delays or disruptions in obtaining wood fiber may result from a number of factors affecting our suppliers, including extreme weather, production or delivery disruptions, inadequate logging capacity, labor disputes, impaired financial condition of a particular supplier, the inability of suppliers to comply with regulatory or sustainability requirements or decreased availability of raw materials. In addition, other companies, whether or not in our industry, could procure wood fiber within our procurement areas and adversely change regional market dynamics, resulting in insufficient quantities of raw material or higher prices. Any of these events could increase our operating costs or prevent us from meeting our commitments to our customers, and thereby could have a material adverse effect on our results of operations, business and financial position, and our ability to pay distributions to our unitholders.
Any interruption or delay in the supply of wood fiber, or our inability to obtain wood fiber at acceptable prices in a timely manner, could impair our ability to meet the demands of our customers and expand our operations which could have a material adverse effect on our results of operations, business and financial position, and our ability to pay distributions to our unitholders.
In addition to our production, we purchase wood pellets produced by other suppliers to fulfill our obligations under our portfolio of long-term off-take contracts or take advantage of market dislocations on an opportunistic basis. Any reliance on other wood pellet producers exposes us to the risk that such suppliers will fail to satisfy their obligations to us pursuant to the associated off-take contracts, including by failing to timely meet quality specifications and volume requirements. Any such failure could increase our costs or prevent us from meeting our commitments to our customers, and therebycustomers.
The materialization of any of the foregoing risks could have an adverse effect on our results of operations, business, and financial position, and cash generated from our ability to pay distributions to our unitholders.operations.
We are exposed to the credit risk of our contract counterparties, including the customers for our products, and any material nonpayment or nonperformance by our customers could adversely affect our financial results, and cash available for distribution.generated from our operations.
We are subject to the risk of loss resulting from nonpayment or nonperformance by our contract counterparties, including our long-term off-take customers and suppliers. Our credit procedures and policies may not be adequate to fully eliminate counterparty credit risk. If we fail to adequately assess the creditworthiness of existing or future customers or suppliers, or if their creditworthiness deteriorates unexpectedly, any resulting nonpayment or nonperformance by them could have an adverse impact on our results of operations, business and financial position, and cash generated from our ability to pay distributions to our unitholders.operations.
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Impacts to the cost or availability of transportation and other infrastructure could reduce our revenues.
Disruptions to or increases in the cost of local or regional transportation services and other forms of infrastructure, such as electricity, due to shortages of vessels, barges, railcars or trucks, weather-related problems, flooding, drought, accidents, mechanical difficulties, bankruptcy, strikes, lockouts, bottlenecks or other events could increase our costs, temporarily impair
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our ability to deliver products to our customers and might, in certain circumstances, constitute a force majeure event under our customer contracts, permitting our customers to suspend taking delivery of and paying for our products.
In addition, persistent disruptions in our access to infrastructure may force us to halt production as we reach storage capacity at our facilities. Accordingly, if the primary transportation services we use to transport our products are disrupted, and we are unable to find alternative transportation providers, it could have a material adverse effect on our results of operations, business and financial position, and cash generated from our ability to pay distributions to our unitholders.operations.
We compete with other wood pellet producers and, if growth in domestic and global demand for wood pellets meets or exceeds management’s expectations, the competition within our industry may grow significantly.
We compete with other wood pellet production companies for the customers to whom we sell our products. Other current producers of utility‑grade wood pellets include AS Graanul Invest, Pinnacle Renewable Energy Inc., Drax Biomass Inc., Fram Renewable Fuels, LLC, and Highland Pellets LLC and Pacific BioEnergy Corporation.LLC. Competition in our industry is based on price, consistency and quality of product, site location, distribution and logistics capabilities, customer service, creditworthiness and reliability of supply. Some of our competitors may have greater financial and other resources than we do, may develop technology superior to ours or may have production plants sited in more advantageous locations from a logistics, procurement or other cost perspective.
In addition, we expect global demand for solid biomass to increase significantly in the coming years. This demand growth may lead to a significant increase in the production levels of our existing competitors and may incentivize new, well‑capitalized competitors to enter the industry, both of which could reduce the demand and the prices we are able to obtain under future off‑take contracts. Significant price decreases or reduced demand could have a material adverse effect on our results of operations, business and financial position, and cash generated from our ability to pay distributions to our unitholders.operations.
Financial Risks
Our level of indebtedness may increase, thereby reducing our financial flexibility.
As of December 31, 2020,2021, our total debt was $926.0 million,$1.3 billion, which primarily consisted of $746.9 million$0.750 billion outstanding under our 6.5% senior unsecured notes due 2026. In January 2022, we issued common stock and used the net proceeds of $0.346 billion to reduce our total debt. In the future, we may incur additional indebtedness in order to make acquisitions or to develop our properties. Our level of indebtedness could affect our operations in several ways, including the following:
a significant portion of our cash flows could be used to service our indebtedness;
the covenants contained in the agreements governing our outstanding indebtedness may limit our ability to borrow additional funds, dispose of assets, pay distributionsdividends, and make certain investments;
our debt covenants may also affect our flexibility in planning for, and reacting to, changes in the economy and in our industry;
a high level of debt would increase our vulnerability to general adverse economic and industry conditions;
a high level of debt may place us at a competitive disadvantage compared to our competitors that may be less leveraged and therefore may be able to take advantage of opportunities that our indebtedness would prevent us from pursuing; and
a high level of debt may impair our ability to obtain additional financing in the future for working capital, capital expenditures, debt service requirements, acquisitions, or general partnershipcorporate or other purposes.
In addition, revolving borrowings under our senior secured revolving credit facility bear, and potentially other credit facilities we or our subsidiaries may enter into in the future will bear, interest at variable rates. If market interest rates increase, such variable‑rate debt will create higher debt service requirements, which could adversely affect our cash flow.
In addition to our debt service obligations, our operations require substantial expenditures on a continuing basis. Our ability to make scheduled debt payments, to refinance our obligations with respect to our indebtedness and to fund capital and non‑capital expenditures necessary to maintain the condition of our operating assets and properties, as well as to provide
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capacity for the growth of our business, depends on our financial and operating performance. General economic conditions and financial, business and other factors affect our operations and our future performance. Many of these factors are beyond our control. We may not be able to generate sufficient cash flows to pay the interest on our debt, and future working capital borrowings or debt or equity financing may not be available to pay or refinance such debt.
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Our exposure to risks associated with foreign currency and interest rate fluctuations, as well as the hedging arrangements we may enter into to mitigate those risks, could have an adverse effect on our financial condition and results of operations.
We may experience foreign currency exchange and interest rate volatility in our business. We began to use hedging transactions in 2016 with respect to certain of our off-take contracts which are, in part or in whole, denominated in foreign currencies, and are party to interest rate swaps with respect to a portion of our variable rate debt, in an effort to achieve more predictable cash flow and to reduce our exposure to foreign currency exchange and interest rate fluctuations.
In addition, there may be instances in which costs and revenue will not be matched with respect to currency denomination. As a result, to the extent that existing and future off-take contracts are not denominated in U.S. Dollars, it is possible that increasing portions of our revenue, costs, assets and liabilities will be subject to fluctuations in foreign currency valuations.
Our hedging transactions involve cost and risk and may not be effective at mitigating our exposure to fluctuations in foreign currency exchange and interest rates. Although the use of hedging transactions limits our downside risk, their use may also limit future revenues. Risks inherent in our hedging transactions include the risk that counterparties to hedging contracts may be unable to perform their obligations and the risk that the terms of such contracts will not be legally enforceable. Likewise, our hedging activities may be ineffective or may not fully offset the financial impact of foreign currency exchange or interest rates fluctuations, which could have an adverse impact on our results of operations, business and financial position, and our ability to pay distributionsdividends to our unitholders.stockholders.
General Risk Factors
Our business may suffer if we lose, or are unable to attract and retain, key personnel.
We depend to a large extent on the services of our senior management team and other key personnel. Members of our senior management and other key employees collectively have extensive expertise in designing, building and operating wood pellet production plants or marine terminals, negotiating long‑term off-take contracts and managing businesses such as ours. Competition for management and key personnel is intense, and the pool of qualified candidates is limited. The loss of any of these individuals or the failure to attract additional personnel, as needed, could have a material adverse effect on our operations and could lead to higher labor costs or reliance on less qualified personnel. In addition, if any of our executives or other key employees were to join a competitor or form a competing company, we could lose customers, suppliers, know-how and key personnel. Our success is dependent on our ability to continue to attract, employ and retain highly skilled personnel.
The international nature of our business subjects us to a number of risks, including foreign exchange risk and unfavorable political, regulatory and tax conditions in foreign countries.
Substantially all of our current product sales are to customers that operate outside of the United States. As a result, we face certain risks inherent in maintaining international operations that include foreign exchange movements, restrictions on foreign trade and investment, including currency exchange controls imposed by or in other countries and trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses, which could increase the prices of our products and make our products less competitive in some countries.
Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our business, cash flows and future profitability.
We are subject to various complex and evolving U.S. federal, state and local and non-U.S. taxes. U.S. federal, state and local and non-U.S. tax laws, policies, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us, in each case, possibly with retroactive effect, and may have an adverse effect on our business, cash flows and future profitability. For example, several tax proposals have been set forth that would, if enacted, make significant changes to U.S. tax laws. Such proposals include, but are not limited to, (i) an increase in the U.S. income tax rate applicable to corporations (such as us) from 21% to 28%, (ii) the imposition of a minimum tax on book income for certain corporations and (iii) the imposition of an excise tax on certain corporate stock repurchases that would be borne by the corporation repurchasing such stock. The U.S. Congress may consider, and could include, some or all of these proposals in connection with tax reform that may be undertaken. In addition, state and local and non-U.S. tax authorities may impose changes to their tax laws, regulations, policies, or ordinances that impact us. It is unclear whether these or similar changes will be enacted and, if enacted,
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how soon any such changes could take effect. The passage of any legislation as a result of these proposals and other similar changes in tax laws could adversely affect our business, cash flows and future profitability.
Labor strikes or work stoppages by our employees could harm our business.
Unionization activities could occur among non-union employees. If union employees strike, participate in a work stoppage or slowdown or engage in other forms of labor strike, it could lead to disruptions in our business, increases in our operating costs and constraints on our operating flexibility. Strikes, work stoppages or an inability to negotiate future collective bargaining agreements on commercially reasonable terms could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Uncertainty relating to the London Inter-bank Offered Rate (“LIBOR”) calculation process and potential phasing out of LIBOR in 2023 may adversely affect our current or future debt obligations, including our senior secured revolving credit facility.
On July 27, 2017, the Chief Executive of the U.K. Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021, which was extended through June 2023 for U.S. dollar LIBOR values. At this time, it is not possible to predict what such phase out, alternative reference rates or other reforms, if they occur, will have on the amount of interest paid on, or the market value of, our current or future debt obligations, including our senior secured revolving credit facility.
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The departure of the U.K. from the EU could adversely affect our results of operations, business and financial position and ability to pay distributions to our unitholders.
The U.K. formally withdrew from the EU in January 2020 under Article 50 of the Treaty of the European Union and was subject to a transition period until the end of 2020. During this period, there has been no fundamental change to U.K.-EU relations, except for the withdrawal of U.K. memberships from EU political institutions. The transition period ceased on December 31, 2020 and as of January 31, 2021 U.K.-EU relations will be determined by a new agreement.
We have take-or-pay off-take contracts with utilities and large generators in the U.K. and in other European markets. For the year ended December 31, 2020, approximately 68% of our product sales were derived from contracts with customers in the U.K. and 28% of our product sales were derived from contracts with customers in other European markets.
The lack of precedent for an exit of a European Member State from the EU means that it is unclear how the access of U.K. businesses to the EU Single Market and how the legal and regulatory environments in the U.K. and the EU will be impacted.
Our business is subject to cybersecurity risks.
As is typical of modern businesses, we are reliant on the continuous and uninterrupted operation of our information technology (“IT”) systems. User access and security of our sites and IT systems can be critical elements of our operations, as are cloud security and protection against cybersecurity incidents. Any IT failure pertaining to availability, access or system security could potentially result in disruption of our activities and personnel, and could adversely affect our reputation, operations or financial performance. Potential risks to our IT systems could include unauthorized attempts to extract business-sensitive, confidential or personal information, denial of access, extortion, corruption of information, or disruption of business processes. A cybersecurity incident resulting in a security breach or failure to identify a security threat could disrupt our business and could result in the loss of sensitive, confidential information or other assets, as well as litigation, regulatory enforcement, violation of privacy or securities laws and regulations, and remediation costs, all of which could materially impact our reputation, operations or financial performance.
A terrorist attack or armed conflict could harm our business.
Terrorist activities and armed conflicts could adversely affect the U.S. and global economies and could prevent us from meeting financial and other obligations or prevent our customers from meeting their obligations to us. We could experience loss of business, delays or defaults in payments from customers or disruptions of fuel supplies and markets, including if domestic and global generators are direct targets or indirect casualties of an act of terror or war. Terrorist activities and the threat of potential terrorist activities and any resulting economic downturn could adversely affect our results of operations, impair our ability to raise capital or otherwise adversely impact our ability to realize certain business strategies.
Risks Related to Our Partnership Structure
Enviva Holdings, LP owns and controls our General Partner, which has sole responsibility for conducting our business and managing our operations. Our General Partner and its affiliates, including Enviva Holdings, LP, have conflicts of interest with us and limited duties, and they may favor their own interests to our detriment and that of our unitholders.
Enviva Holdings, LP, owns and controls our General Partner and appoints all ofIf the directors of our General Partner. Although our General Partner has a duty to manage us in a manner that it believes is not adverse to our interest, the executive officers and directors of our General Partner have a fiduciary duty to manage our General Partner in a manner beneficial to our sponsor. Therefore, conflicts of interest may arise between our sponsor or any of its affiliates, including our General Partner, on the one hand, and us or any of our unitholders, on the other hand. In resolving these conflicts of interest, our General Partner may favor its own interests and the interests of its affiliates over the interestsprice of our common unitholders. These conflictsstock fluctuates significantly, your investment could lose value.
Although our common stock is listed on the NYSE, we cannot assure you that an active public market will continue for our common stock. If an active public market for our common stock does not continue, the trading price and liquidity of our common stock will be materially and adversely affected. If there is a thin trading market or “float” for our stock, the market price for our common stock may includefluctuate significantly more than the following:stock market as a whole. Without a large float, our common stock would be less liquid than the stock of companies with broader public ownership and, as a result, the trading prices of our common stock may be more volatile. In addition, in the absence of an active public trading market, investors may be unable to liquidate their investment in us. Furthermore, the stock market is subject to significant price and volume fluctuations, and the price of our common stock could fluctuate widely in response to several factors, including; our quarterly or annual operating results; changes in our earnings estimates; investment recommendations by securities analysts following our business or our industry; additions or departures of key personnel; changes in the business, earnings estimates or market perceptions of our competitors; our failure to achieve operating results consistent with securities analysts’ projections; changes in industry, general market or economic conditions; and announcements of legislative or regulatory changes.
The stock market has experienced extreme price and volume fluctuations in recent years that have significantly affected the quoted prices of the securities of many companies, including companies in our General Partner is allowedindustry. The changes often appear to take into account the interests of parties other than us, such as our sponsor, in exercising certain rights under our partnership agreement;
neither our partnership agreement nor any other agreement requires our sponsor to pursue a business strategy that favors us;
our partnership agreement eliminates and replaces the fiduciary duties that would otherwise be owed by our General Partner with contractual standards governing its duties, limits our General Partner’s liabilities and restricts the remedies available to our unitholders for actions that, without such eliminations and limitations, might constitute breaches of fiduciary duty;occur
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except in limited circumstances,without regard to specific operating performance. The price of our General Partner has the powercommon stock could fluctuate based upon factors that have little or nothing to do with our company and authority to conductthese fluctuations could materially reduce our stock price.
If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our stock or if our operating results do not meet their expectations, our stock price could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover our company downgrade our stock or if our operating results do not meet their expectations, our stock price could decline.
Our certificate of incorporation and bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock.
Our certificate of incorporation authorizes our board of directors to issue preferred stock without unitholder approval;stockholder approval. If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us. In addition, some provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our stockholders, including:
our General Partner determinesadvance notice provisions for stockholder proposals and nominations for elections to the amount and timingboard of asset purchases and sales, borrowings, issuancesdirectors to be acted upon at meetings of additional partnership securities and the level of reserves, each of which can affect the amount of cash that is distributed to our unitholders;
our General Partner determines the amount and timing of any cash expenditure and whether an expenditure is classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion capital expenditure, which does not reduce operating surplus. This determination can affect the amount of cash from operating surplus that is distributed to our common unitholders relative to our sponsor as the holder of our incentive distribution rights;
our General Partner may cause us to borrow funds in order to permit the payment of cash distributions;
our partnership agreement permits us to distribute up to $39.3 million as operating surplus, even if it is generated from asset sales, borrowings other than working capital borrowings or other sources that would otherwise constitute capital surplus. This cash may be used to fund distributions to holders of our incentive distribution rights;
our General Partner determines which costs incurred by it and its affiliates are reimbursable by us, including through the MSAs;
our partnership agreement does not restrict our General Partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with its affiliates on our behalf;
our General Partner intends to limit its liability regarding our contractual and other obligations;
our General Partner may exercise its right to call and purchase common units if it and its affiliates own more than 80% of the common units;
our General Partner controls the enforcement of obligations that it and its affiliates owe to us;
our General Partner decides whether to retain separate counsel, accountants or others to perform services for us;stockholders; and
our General Partner may elect to cause us to issue common units to it in connection with a resetting oflimitations on the target distribution levels related to our sponsor’s incentive distribution rights without the approval of the conflicts committee of the board of directorsability of our General Partner or the unitholders. This election may result in lower distributionsstockholders to the common unitholders in certain situations.call special meetings.
In addition, we may compete directly with our sponsor and entities in which it has an interest for acquisition opportunities and potentially will compete with these entities for new business or extensions of the existing services provided by us.
The board of directors of our General Partner may modify or revoke our cash distribution policy at any time at its discretion. Our partnership agreement does not require us to pay any distributions at all.
Pursuant to our cash distribution policy, we intend to distribute quarterly at least $0.4125 per unit on all of our units to the extent we have sufficient cash after the establishment of cash reserves and the payment of our expenses, including payments to our General Partner and its affiliates. However, the board may change our cash distribution policy at any time at its discretion and could elect not to pay distributions for one or more quarters. Please read Part II, Item 5. “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Cash Distribution Policy.”
In addition, our partnership agreement does not require us to pay any distributions at all. Accordingly, investors are cautioned not to place undue reliance on the permanence of such a policy in making an investment decision. Any modification or revocation of our cash distribution policy could substantially reduce or eliminate the amounts of distributions to our unitholders. The amount of distributions we make, if any, and the decision to make any distribution at all will be determined by the board of directors of our General Partner, whose interests may differ from those of our common unitholders. Our General Partner has limited duties to our unitholders, which may permit it to favor its own interests or the interests of our sponsor to the detriment of our common unitholders.
Our General Partner limits its liability regarding our obligations.
Our General Partner limits its liability under contractual arrangements between us and third parties so that the counterparties to such arrangements have recourse only against our assets, and not against our General Partner or its assets. Our General Partner may therefore cause us to incur indebtedness or other obligations that are nonrecourse to our General Partner.
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Our partnership agreement provides that any action taken by our General Partner to limit its liability is not a breach of our General Partner’s duties, even if we could have obtained more favorable terms without the limitation on liability. In addition, we are obligated to reimburse or indemnify our General Partner to the extent that it incurs obligations on our behalf. Any such reimbursement or indemnification payments would reduce the amount of cash otherwise available for distribution to our unitholders.
We intend to distribute a significant portion of our cash available for distribution to our partners, which could limit our ability to grow and make acquisitions.
We intend to distribute most of our cash available for distribution, which could cause our growth to proceed at a slower pace than that of businesses that reinvest their cash to expand ongoing operations. To the extent we issue additional units, whether in connection with acquisitions, expansion capital expenditures or otherwise, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level. There are no limitations in our partnership agreement on our ability to issue additional units, including units ranking senior to the common units. The incurrence of additional commercial borrowings or other debt to finance our growth strategy would result in increased interest expense, which, in turn, may impact the cash that we have available to distribute to our unitholders.
Our partnership agreement eliminates and replaces our General Partner’s fiduciary duties to holders of our units.
Our partnership agreement contains provisions that eliminate and replace the fiduciary standards to which our General Partner would otherwise be held by state fiduciary duty law. For example, our partnership agreement permits our General Partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our General Partner, or otherwise free of fiduciary duties to us and our unitholders. This entitles our General Partner to consider only the interests and factors that it desires and relieves it of any duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or our limited partners. Examples of decisions that our General Partner may make in its individual capacity include:
how to allocate business opportunities among us and its affiliates;
whether to exercise its call right;
whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the board of directors of our General Partner;
how to exercise its voting rights with respect to the units it owns;
whether to exercise its registration rights;
whether to elect to reset target distribution levels; and
whether or not to consent to any merger or consolidation of the Partnership or amendment to the partnership agreement.
Limited partners who own common units are treated as having consented to the provisions in the partnership agreement, including the provisions discussed above.
Our partnership agreement restricts the remedies available to holders of our units for actions taken by our General Partner that might otherwise constitute breaches of fiduciary duty.
Our partnership agreement contains provisions that restrict the remedies available to unitholders for actions taken by our General Partner that might otherwise constitute breaches of fiduciary duty under state fiduciary duty law. For example, our partnership agreement provides that:
whenever our General Partner makes a determination or takes, or declines to take, any other action in its capacity as our General Partner, our General Partner is generally required to make such determination, or take or decline to take such other action, in good faith, and will not be subject to any higher standard imposed by our partnership agreement, Delaware law or any other law, rule or regulation, or at equity;
our General Partner and its officers and directors will not be liable for monetary damages or otherwise toprohibits us or our limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that such losses or liabilities were the result of conduct in which our General Partner or its officers or directors engaged in bad faith, meaning that they believed that the decision was adverse to our interest or, with respect to any criminal conduct, with knowledge that such conduct was unlawful; and
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our General Partner will not be in breach of its obligations under the partnership agreement or its duties to us or our limited partners if a transaction with an affiliate or the resolution of a conflict of interest is:
(1) approved by the conflicts committee of the board of directors of our General Partner, although our General Partner is not obligated to seek such approval; or
(2) approved by the vote of a majority of the outstanding common units, excluding any common units owned by our General Partner and its affiliates.
In connection with a situation involving a transaction with an affiliate or a conflict of interest, other than one where our General Partner is permitted to act in its sole discretion, any determination by our General Partner must be made in good faith. If an affiliate transaction or the resolution of a conflict of interest is not approved by our common unitholders or the conflicts committee then it will be presumed that, in making its decision, taking any action or failing to act, the board of directors acted in good faith, and in any proceeding brought by or on behalf of us or of any limited partner, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption.
Our sponsor and other affiliates of our General Partner may compete with us.
Our partnership agreement provides that our General Partner is restricted from engaging in any business activities othercombination with any “interested stockholder,” meaning generally that a stockholder who beneficially owns more than acting as our General Partner, engaging in those activities incidental to its ownership interest in us and providing management, advisory and administrative services to its affiliates or to other persons. However, affiliates15% of our General Partner, including our sponsor, are not prohibited from engaging in other businesses or activities, including those that might be in direct competition with us. In addition, our sponsor may compete withstock cannot acquire us for investment opportunities and may own an interest in entities that compete with us.
Pursuant to the terms of our partnership agreement, the doctrine of corporate opportunity, or any analogous doctrine, does not apply to our General Partner or any of its affiliates, including its executive officers and directors and our sponsor. Any such person or entity that becomes aware of a potential transaction, agreement, arrangement or other matter that may be an opportunity for us will not have any duty to communicate or offer such opportunity to us. Any such person or entity will not be liable to us or to any limited partner for breach of any fiduciary duty or other duty by reason of the fact that such person or entity pursues or acquires such opportunity for itself, directs such opportunity to another person or entity or does not communicate such opportunity or information to us. This may create actual and potential conflicts of interest between us and affiliates of our General Partner and result in less than favorable treatment of us and our unitholders.
The holder or holders of our incentive distribution rights may elect to cause us to issue common units to it in connection with a resetting of the incentive distribution without the approval of our unitholders. This election may result in lower distributions to our common unitholders in certain situations.
The holder or holders of a majority of our incentive distribution rights (currently our sponsor) have the right, at any time when we have made cash distributions in excess of the then‑applicable third target distribution for each of the prior four consecutive fiscal quarters, to reset the initial target distribution levels at higher levels based on our cash distribution levels at the time of the exercise of the reset election. Following a reset election, a baseline distribution amount will be calculated equal to an amount equal to the prior cash distribution per common unit for the fiscal quarter immediately preceding the reset election (such amount is referred to as the “reset minimum quarterly distribution”), and the target distribution levels will be reset to correspondingly higher levels based on percentage increases above the reset minimum quarterly distribution. In addition, in connection with a reset election, the holders of our incentive distribution rights would receive a number of newly issued common units based on the value of cash distributions paid in respect of the incentive distribution rights in the quarter preceding the reset election.
We anticipate that our sponsor would exercise this reset right in order to facilitate acquisitions or internal growth projects that would not be sufficiently accretive to cash distributions per unit without such conversion. However, our sponsor may transfer the incentive distribution rights at any time. It is possible that our sponsor or a transferee could exercise this reset election at a time when we are experiencing declines in our aggregate cash distributions or at a time when the holders of the incentive distribution rights expect that we will experience declines in our aggregate cash distributions in the foreseeable future. In such situations, the holders of the incentive distribution rights may be experiencing, or may expect to experience, declines in the cash distributions they receive related to the incentive distribution rights and may therefore desire to be issued our common units, which are entitled to specified priorities with respect to our distributions and which therefore may be more advantageous for them to own in lieu of the right to receive incentive distribution payments based on target distribution levels that are less certain to be achieved. As a result, a reset election may cause our common unitholders to experience dilution in the amount of cash distributions that they would have otherwise received had we not issued new common units to the holders of the incentive distribution rights in connection with resetting the target distribution levels.
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Our sponsor has certain incentive distribution rights that reduce the amount of our cash available for distribution to our common unitholders.
Our sponsor currently holds incentive distribution rights that entitle it to receive an increasing percentage (15%, 25% and 50%) of the cash that we distribute to our common unitholders from available cash after the minimum quarterly distribution and certain target distribution levels have been achieved. The maximum distribution right for our sponsor to receive 50% of any distributions paid to our common unitholders does not include any distributions that our sponsor may receive on common units it owns. Effective as of our quarterly cash distribution in the fourth quarter of 2017, our sponsor was at the top tier of the incentive distribution rights scale. Given that a higher percentage of our cash flows is allocated to our sponsor due to these incentive distribution rights, it may be more difficult for us to increase the amount of distributions to our unitholders and our cost of capital may be higher, making investments, capital expenditures and acquisitions, and therefore, future growth, by us potentially more costly, and in some cases, potentially prohibitively so.
Holders of our common units have limited voting rights and are not entitled to elect our General Partner or its directors.
Compared to the holders of common stock in a corporation, unitholders have limited voting rights and, therefore, limited ability to influence management’s decisions regarding our business. Unitholders have no right on an annual or ongoing basis to elect our General Partner or its board of directors. The board of directors of our General Partner, including the independent directors, is chosen entirely by our sponsor, as a result of it owning our General Partner, and not by our unitholders. Unlike publicly traded corporations, we do not hold annual meetings of our unitholders to elect directors or consider other matters routinely addressed at annual meetings of stockholders of corporations.
As a result of these limitations, the price at which the common units trade could be diminished because of the absence or reduction of a takeover premium in the trading price.
Even if holders of our common units are dissatisfied, they cannot currently remove our General Partner without our sponsor’s consent.
If our unitholders are dissatisfied with the performance of our General Partner, they have limited ability to remove our General Partner. Unitholders are currently unable to remove our General Partner without our sponsor’s consent because our sponsor and its affiliates own sufficient units to be able to prevent its removal. The vote of the holders of at least 66 2/3% of all outstanding common units is required to remove our General Partner. As of February 14, 2021, our sponsor owned approximately 34% of our common units. This condition would enable our sponsor to prevent the removal of our General Partner.
Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units.
Our partnership agreement restricts unitholders’ voting rights by providing that any units held by a person or group that owns 20% or more of any class of units then outstanding, other than our General Partner and its affiliates, their transferees and persons who acquired such units with the prior approval of the board of directors of our General Partner, cannot vote on any matter.
Our general partner interest or the control of our General Partner may be transferred to a third party without unitholder consent.
Our General Partner may transfer its general partner interest to a third party without the consent of our unitholders. Furthermore, our partnership agreement does not restrict the ability of the owner of our General Partner to transfer its membership interests in our General Partner to a third party. The new owner of our General Partner would then be in a position to replace the board of directors and executive officers of our General Partner with its own designees and thereby exert significant control over the decisions taken by the board of directors and executive officers of our General Partner. This effectively permits a “change of control” without the vote or consent of the unitholders.
The incentive distribution rights may be transferred to a third party without unitholder consent.
Our sponsor may transfer the incentive distribution rights to a third party at any time without the consent of our unitholders. If our sponsor transfers the incentive distribution rights to a third party, our sponsor would not have the same incentive to grow our partnership and increase quarterly distributions to unitholders over time. For example, a transfer of incentive distribution rights by our sponsor could reduce the likelihood of our sponsor accepting offers made by us relating to assets owned by our sponsor, as it would have less of an economic incentive to grow our business, which would impact our ability to grow our asset base.
Our General Partner has a call right that may require unitholders to sell their common units at an undesirable time or price.
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If at any time our General Partner and its affiliates own more than 80% of the common units, our General Partner will have the right, which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the common units held by unaffiliated persons at a price equal to the greater of (1) the average of the daily closing price of the common units over the 20 trading days preceding the date three days before notice of exercise of the call right is first mailed and (2) the highest per‑unit price paid by our General Partner or any of its affiliates for common units during the 90‑day period preceding the date such notice is first mailed. As a result, unitholders may be required to sell their common units at an undesirable time or price and may not receive any return or a negative return on their investment. Unitholders may also incur a tax liability upon a sale of their units. Our General Partner is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon exercise of the call right. There is no restriction in our partnership agreement that prevents our General Partner from causing us to issue additional common units and then exercising its call right. If our General Partner exercised its call right, the effect would be to take us private and, if the units were subsequently deregistered, we would no longer be subject to the reporting requirements of the Exchange Act.
We may issue additional units without unitholder approval, which would dilute existing unitholder ownership interests.
Our partnership agreement does not limit the number of additional limited partner interests we may issue at any time without the approval of our unitholders. The issuance of additional common units or other equity interests of equal or senior rank will have the following effects:
our existing unitholders’ proportionate ownership interest in us will decrease;
the amount of cash available for distribution on each unit may decrease;
the ratio of taxable income to distributions may increase;
the relative voting strength of each previously outstanding unit may be diminished; and
the market price of the common units may decline.
There are no limitations in our partnership agreement on our ability to issue units ranking senior to the common units.
In accordance with Delaware law and the provisions of our partnership agreement, we may issue additional partnership interests that are senior to the common units in right of distribution, liquidation and voting. The issuance by us of units of senior rank may (1) reduce or eliminate the amount of cash available for distribution to our common unitholders; (2) diminish the relative voting strength of the total common units outstanding as a class; or (3) subordinate the claims of the common unitholders to our assets in the event of our liquidation.
The market price of our common units could be adversely affected by sales of substantial amounts of our common units in the public or private markets, including sales by our sponsor or other large holders.
Our sponsor owns approximately 34% of our common units. Sales by our sponsor or other large holders of a substantial number of our common units in the public markets, or the perception that such sales might occur, could have a material adverse effect on the price of our common units or could impair our ability to obtain capital through an offering of equity securities.
Cost reimbursements due to our General Partner and its affiliates for services provided to us or on our behalf will reduce cash available for distribution to our unitholders. The amount and timing of such reimbursements will be determined by our General Partner.
Under the MSAs, we are obligated to reimburse our sponsor for all direct or indirect costs and expenses incurred by, or chargeable to, our sponsor in connection with its provision of services necessary for the operation of our business. If the MSAs were terminated without replacement, or our General Partner or its affiliates provided services outside of the scope of the MSAs, our partnership agreement would require us to reimburse our General Partner and its affiliates for all expenses they incur and payments they make on our behalf. Our partnership agreement does not set a limit on the amount of expenses for which our General Partner and its affiliates may be reimbursed. These expenses include salary, bonus, incentive compensation and other amounts paid to persons who perform services for us or on our behalf and expenses allocated to our General Partner by its affiliates. Our partnership agreement provides that our General Partner determines the expenses that are allocable to us. The reimbursement of expenses and payment of fees, if any, to our General Partner and its affiliates will reduce the amount of cash available for distribution to our unitholders.
The price of our common units may fluctuate significantly and unitholders could lose all or part of their investment.
The market price of our common units may be influenced by many factors, some of which are beyond our control, including our results of operations and financial condition, the amount of our quarterly distributions, changes in accounting standards, policies, guidance, interpretations or principles, general economic conditions, the failure of securities analysts to
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cover our common units or changes in financial estimates by analysts, future sales of our common units and the other factors described in these “Risk Factors.”
Unitholders may have liability to repay distributions.
Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under Section 17‑607 of the Delaware Revised Uniform Limited Partnership Act, we may not make a distribution to our unitholders if the distribution would cause our liabilities to exceed the fair value of our assets. Delaware law provides that for a period of three years from the date this person became an interested stockholder, unless various conditions are met, such as approval of the impermissible distribution, limited partners who received the distribution and who knew at the timetransaction by our board of the distribution that it violated Delaware law will be liable to us for the distribution amount. Liabilities to partners on account of their partnership interests and liabilities that are non‑recourse to us are not counted for purposes of determining whether a distribution is permitted.directors.
The New York Stock Exchange (the “NYSE”) does not require a publicly traded partnership likecorporate opportunity provisions in our certificate of incorporation could enable affiliates of ours to benefit from corporate opportunities that might otherwise be available to us.
Subject to the limitations of applicable law, our certificate of incorporation, among other things; permits us to complyenter into transactions with certainentities in which one or more of its corporate governance requirements.
Our common unitsour officers or directors are listed on the NYSE. Because we are a publicly traded partnership, the NYSE does not require us to have a majority of independent directors on our General Partner’s board of directors or to establish a compensation committee or a nominating and corporate governance committee. Accordingly, unitholders do not have the same protections afforded to certain corporations that are subject to all of the NYSE corporate governance requirements. Please read Part III, Item 10. “Directors, Executive Officers and Corporate Governance—Director Independence.”
Tax Risks to Common Unitholders
Our tax treatment depends on our status as a partnership for federal income tax purposes and not being subject to a material amount of entity‑level taxation. If the Internal Revenue Service (“IRS”) were to treat us as a corporation for federal income tax purposes, or we become subject to entity‑level taxation for state tax purposes, our cash available for distribution to our unitholders would be substantially reduced.
The anticipated after‑tax economic benefit of an investment in our common units depends largely on our being treated as a partnership for federal income tax purposes.
Despite the fact that we are organized as a limited partnership under Delaware law, we would be treated as a corporation for U.S. federal income tax purposes unless we satisfy a “qualifying income” requirement. Based on our current operations and current Treasury Regulations, we believe we satisfy the qualifying income requirement. We have requested and obtained a favorable private letter ruling from the IRS to the effect that, based on facts presented in the private letter ruling request, our income from processing timber feedstocks into pellets and transporting, storing, marketing and distributing such timber feedstocks and wood pellets constitute “qualifying income” within the meaning of Section 7704 of the Internal Revenue Code of 1986 (the “Code”). However, no ruling has been, and we expect none will be, requested regarding our treatment as a partnership for U.S. federal income tax purposes. Failing to meet the qualifying income requirement or a change in current law could cause us to be treated as a corporation for U.S. federal income tax purposesfinancially or otherwise subject us to taxation as an entity.
If we were treated as a corporation for federal income tax purposes, we would pay U.S. federal income tax on our taxable income at the corporate tax rate. Distributions to our unitholders would generally be taxed again as corporate distributions, and no income, gains, losses or deductions would flow through to our unitholders. Because a tax would be imposed on us as a corporation, our cash available for distribution to our unitholders would be substantially reduced. Therefore, treatment of us as a corporation would result in a material reduction in the anticipated cash flow and after‑tax return to the unitholders, likely causing a substantial reduction in the valueinterested; permits any of our common units.
Our partnership agreementstockholders, officers or directors to conduct business that competes with us and to make investments in any kind of property in which we may make investments; and provides that if any director or officer of one of our affiliates who is also one of our officers or directors becomes aware of a law is enactedpotential business opportunity, transaction or existing law is modifiedother matter (other than one expressly offered to that director or interpretedofficer in writing solely in his or her capacity as our director or officer), that director or officer will have no duty to communicate or offer that opportunity to us, and will be permitted to communicate or offer that opportunity to such affiliates and that director or officer will not be deemed to have (i) acted in a manner inconsistent with his or her fiduciary or other duties to us regarding the opportunity or (ii) acted in bad faith or in a manner inconsistent with our best interests.
These provisions create the possibility that subjectsa corporate opportunity that would otherwise be available to us to taxation as a corporation or otherwise subjects us to entity‑level taxation for U.S. federal, state or local or foreign income tax purposes, the minimum quarterly distribution amount and the target distribution amounts may be adjusted to reflect the impact of that law or interpretation on us. At the state level, several states have been evaluating ways to subject partnerships to entity‑level taxation through the imposition of state income, franchise or other forms of taxation. Specifically, we currently own assets and conduct business in Mississippi, North Carolina, Florida, Virginia, Georgia and South Carolina, each of which imposes a margin or franchise tax. In the future, we may expand our operations. Imposition of a similar tax on us in other jurisdictions that we may expand to could substantially reduce our cash availableused for distribution to our unitholders.
The tax treatment of publicly traded partnerships or an investment in our units could be subject to potential legislative, judicial or administrative changes or differing interpretations, possibly applied on a retroactive basis.
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The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units may be modified by administrative, legislative or judicial changes or differing interpretations at any time. Members of Congress have frequently proposed and considered substantive changes to the existing U.S. federal income tax laws that affect publicly traded partnerships. Although there is no current legislative proposal to eliminate the qualifying income exception upon which we rely for our treatment as a partnership for U.S. federal income tax purposes, current and former legislative proposals would have eliminated the qualifying income exception for publicly traded partnerships relying on qualifying income from fossil fuel activities. In addition, the Treasury Department has issued, and in the future may issue, regulations interpreting those laws that affect publicly traded partnerships. We believe we qualify as a partnership for U.S. federal income tax purposes under current regulations.
However, any modification to the U.S. federal income tax laws may be applied retroactively and could make it more difficult or impossible for us to meet the exception for certain publicly traded partnerships to be treated as partnerships for U.S. federal income tax purposes. We are unable to predict whether any of these changes or other proposals will ultimately be enacted. Any similar or future legislative changes could increase our entity-level tax burden and negatively impact the value of an investment in our common units. You are urged to consult with your own tax advisor with respect to the status of regulatory or administrative developments and proposals and their potential effect on your investment in our common units.
If the IRS were to contest the federal income tax positions we take, it may adversely impact the market for our common units, and the costs of any such contest would reduce cash available for distribution to our unitholders.
We have requested and obtained a favorable private letter ruling from the IRS to the effect that, based on facts presented in the private letter ruling request, our income from processing timber feedstocks into pellets and transporting, storing, marketing and distributing such timber feedstocks and wood pellets will constitute “qualifying income” within the meaning of Section 7704 of the Code. However, no ruling has been, and we expect none will be, requested regarding our treatment as a partnership for U.S. federal income tax purposes. The IRS may adopt positions that differ from the positions we take. It may be necessary to resort to administrative or court proceedings to sustain some or all of the positions we take. A court may not agree with some or all of the positions we take. Any contest with the IRS may materially and adversely impact the market for our common units and the price at which they trade. Moreover, the costs of any contest between us and the IRS will result in a reduction in cash available for distribution to our unitholders and thus will be borne indirectly by our unitholders.
If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from us, in which case we may require our unitholders and former unitholders to reimburse us for such taxes (including any applicable penalties or interest) or, if we are required to bear such payments, our cash available for distribution to our unitholders might be substantially reduced.
Pursuant to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the IRS makes audit adjustments to our income tax returns, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us. To the extent possible under the new rules, our General Partner may elect to either pay the taxes (including any applicable penalties and interest) directly to the IRS or, if we are eligible, issue a revised information statement to each unitholder and former unitholder with respect to an audited and adjusted return, which statement reports the items adjusted and certain other amounts. Although our General Partner may elect to have our unitholders and former unitholders take such audit adjustment into account and pay any resulting taxes (including applicable penalties and interest) in accordance with their interests in us during the tax year under audit, there can be no assurance that such election will be practical, permissible or effective in all circumstances. As a result, our current unitholders may bear some or all of the tax liability resulting from such audit adjustment, even if such unitholders did not own units in us during the tax year under audit. If, as a result of any such audit adjustment, we are required to make payments of taxes, penalties and interest, we may require our unitholders and former unitholders to reimburse us for such taxes (including any applicable penalties or interest) or, if we are required to bear such payments, our cash available for distribution to our unitholders might be substantially reduced. These rules are not applicable for tax years beginning on or prior to December 31, 2017.
Even if unitholders do not receive any cash distributions from us, unitholders will be required to pay taxes on their share of our taxable income.
Unitholders are required to pay federal income taxes and, in some cases, state and local income taxes, on unitholders’ share of our taxable income, whether or not they receive cash distributions from us. For example, if we sell assets and use the proceeds to repay existing debt or fund capital expenditures, you may be allocated taxable income and gain resulting from the sale, and our cash available for distribution would not increase. Similarly, taking advantage of opportunities to reduce our existing debt, such as debt exchanges, debt repurchases, or modifications of our existing debt could result in “cancellation of indebtedness income” being allocated to our unitholders as taxable income without any increase in our cash available for
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distribution. Unitholders may not receive cash distributions from us equal to their share of our taxable income or even equal to the actual tax due from them with respect to that income.
A tax gain or loss on the disposition of our common units could be more or less than unitholders expect.
If unitholders sell their common units, they will recognize a gain or loss equal to the difference between the amount realized and their tax basis in those common units. Because distributions in excess of unitholders’ allocable share of our net taxable income decrease their tax basis in their common units, the amount, if any, of such prior excess distributions with respect to the units unitholders sell will, in effect, become taxable income to our unitholders if they sell such units at a price greater than their tax basis in those units, even if the price they receive is less than their original cost. In addition, because the amount realized includes a unitholder’s share of our nonrecourse liabilities, if they sell their units, unitholders may incur a tax liability in excess of the amount of cash they receive from the sale.
Furthermore, a substantial portion of the amount realized, whether or not representing gain, may be taxed as ordinary income due to potential recapture items, including depreciation recapture. Thus, you may recognize both ordinary income and capital loss from the sale of your units if the amount realized on a sale of your units is less than your adjusted basis in the units. Net capital loss may only offset capital gains and, in the case of individuals, up to $3,000 of ordinary income per year. In the taxable period in which you sell your units, you may recognize ordinary income from our allocations of income and gain to you prior to the sale and from recapture items that generally cannot be offset by any capital loss recognized upon the sale of units.
Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences to them.
Investment in our common units by tax-exempt entities, such as employee benefit plans and individual retirement accounts (known as IRAs), raises issues unique to them. For example, virtually all of our income allocated to organizations that are exempt from federal income tax, including IRAs and other retirement plans, will be unrelated business taxable income and will be taxable to them. Any tax‑exempt entity should consult its tax advisor before investing in our common units.
Unitholders may be subject to limitation on their ability to deduct interest expense incurred by us.
Historically, we have been entitled to a full deduction for interest paid or accrued on indebtedness properly allocable to our trade or business during our taxable year. However, subject to certain exceptions in the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act, discussed below),under the Tax Cuts and Jobs Act signed into law in December 2017, for taxable years beginning after December 31, 2017, our deduction for “business interest” is limited to the sum of our business interest income and 30% of our “adjusted taxable income.” For the purposes of this limitation, our adjusted taxable income is computed without regard to any business interest expense or business interest income, and in the case of taxable years beginning before January 1, 2022, any deduction allowable for depreciation, amortization or depletion. As a result, we expect that a substantial portion of our business interest deduction may be limited.
For the 2020 taxable year, the CARES Act generally increases the 30% adjusted taxable income limitation to 50%. For purposes of determining the 50% adjusted taxable income limitation, partnerships may substitute their 2020 adjusted taxable income with their 2019 adjusted taxable income, which may result in a greater business interest expense deduction. In addition, unitholders may treat 50% of any excess business interest allocated to them in 2019 as deductible in the 2020 taxable year without regard to the 2020 business interest expense limitation. The remaining 50% of such unitholder’s excess business interest is carried forward and subject to the same limitations as other taxable years.
Non-U.S. Unitholders will be subject to U.S. taxes and withholding with respect to their income and gain from owning our units.
Non-U.S. unitholders are generally taxed and subject to income tax filing requirements by the United States on income effectively connected with a U.S. trade or business. Income allocated to our unitholders and any gain from the sale of our units will generally be considered to be “effectively connected” with a U.S. trade or business. As a result, distributions to a non-U.S. unitholder will be subject to withholding at the highest applicable effective tax rate and a non-U.S. unitholder who sells or otherwise disposes of a unit will also be subject to U.S. federal income tax on the gain realized from the sale or disposition of such unit.
Moreover, the transferee of an interest in a partnership that is engaged in a U.S. trade or business is generally required to withhold 10% of the amount realized by the transferor unless the transferor certifies that it is not a foreign person. While the determination of a partner’s amount realized generally includes any decrease of a partner’s share of the partnership’s liabilities, recently issued Treasury regulations provide that the “amount realized” on a transfer of an interest in a publicly traded partnership, such as our common units, will generally be the amount of gross proceeds paid to the broker effecting the applicable transfer on behalf of the transferor, and thus will be determined without regard to any decrease in that partner’s share of a publicly traded partnership’s liabilities. The Treasury regulations further provide that withholding on a transfer of an
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interest in a publicly traded partnership will not be imposed on a transfer that occurs prior to January 1, 2022. For a transfer of interests in a publicly traded partnership that is effected through a broker on or after January 1, 2022, the obligation to withhold is imposed on the transferor’s broker. Prospective foreign unitholders should consult their tax advisors regarding the impact of these rules on an investment in our common units.
We treat each purchaser of our common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment, which could adversely affect the value of the common units.
Because we cannot match transferors and transferees of common units, we have adopted certain methods for allocating depreciation and amortization deductions that may not conform to all aspects of existing Treasury Regulations. A successful IRS challenge to the use of those methods could adversely affect the amount of tax benefits available to our unitholders. It also could affect the timing of these tax benefits or the amount of gain from our unitholders’ sale of common units and could have a negative impact on the value of our common units or result in audit adjustments to their tax returns.
We generally prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based on the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders.
We generally prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based on the ownership of our units on the first day of each month (the “Allocation Date”), instead of on the basis of the date a particular unit is transferred. Similarly, we generally allocate certain deductions for depreciation of capital additions, gain or loss realized on a sale or other disposition of our assets and, in the discretion of our General Partner, any other extraordinary item of income, gain, loss or deduction based on ownership on the Allocation Date. Treasury Regulations allow a similar monthly simplifying convention, but such regulations do not specifically authorize all aspects of our proration method. If the IRS were to challenge our proration method, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders.
A unitholder whose units are the subject of a securities loan (e.g., a loan to a “short seller” to cover a short sale of units) may be considered as having disposed of those units. If so, he would no longer be treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition.
Because there are no specific rules governing the U.S. federal income tax consequence of loaning a partnership interest, a unitholder whose units are the subject of a securities loan may be considered as having disposed of the loaned units. In that case, the unitholder may no longer be treated for tax purposes as a partner with respect to those units during the period of the loan to the short seller and the unitholder may recognize gain or loss from such disposition. Moreover, during the period of the loan, any of our income, gain, loss or deduction with respect to those units may not be reportable by the unitholder and any cash distributions received by the unitholder as to those units could be fully taxable as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a securities loan are urged to consult a tax advisor to determine whether it is advisable to modify any applicable brokerage account agreements to prohibit their brokers from borrowing their units.
We have adopted certain valuation methodologies in determining a unitholder’s allocations of income, gain, loss and deduction. The IRS may challenge these methodologies or the resulting allocations, which could adversely affect the value of the common units.
In determining the items of income, gain, loss and deduction allocable to our unitholders, we must routinely determine the fair market value of our assets. Although we may, from time to time, consult with professional appraisers regarding valuation matters, we make many fair market value estimates using a methodology based on the market value of our common units as a means to measure the fair market value of our assets. The IRS may challenge these valuation methods and the resulting allocations of income, gain, loss and deduction.
A successful IRS challenge to these methods or allocations could adversely affect the timing or amount of taxable income or loss being allocated to our unitholders. It also could affect the amount of gain from our unitholders’ sale of common units and could have a negative impact on the value of the common units or result in audit adjustments to our unitholders’ tax returns without the benefit of additional deductions.
Our unitholders will likely be subject to state and local taxes and income tax return filing requirements in jurisdictions where they do not live as a resultone of investing in our common units.
In addition to U.S. federal income taxes, our unitholders may be subject to other taxes, including foreign, state and local taxes, unincorporated business taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions inaffiliates.
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which we conduct business or own property now or in the future, even if they do not live in any of those jurisdictions. Our unitholders will likely be required to file foreign, state and local income tax returns and pay state and local income taxes in some or all of these various jurisdictions. Further, our unitholders may be subject to penalties for failure to comply with those requirements.
We currently own assets in multiple states. Many of these states currently impose a personal income tax on individuals, corporations and other entities. As we make acquisitions or expand our business, we may own assets or conduct business in additional states that impose a personal income tax. It is our unitholders’ responsibility to file all U.S. federal, foreign, state and local tax returns and pay any resulting taxes due in these jurisdictions. Unitholders should consult with their own tax advisors regarding the filing of such tax returns, the payment of such taxes, and the deductibility of any such taxes paid.
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ITEM 1B.    UNRESOLVED STAFF COMMENTS
None.
ITEM 2.    PROPERTIES
Information regarding our properties is contained in Part I, Item 1. “Business” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
ITEM 3.    LEGAL PROCEEDINGS
Although we may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business, we do not believe that we are a party to any litigation that will have a material adverse impact on our financial condition or results of operations.
ITEM 4.    MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
On December 31, 2021, the Company completed its conversion from a Delaware limited partnership named Enviva Partners, LP to a Delaware corporation named Enviva Inc. As a result of and at the effective date of the Conversion, each common unit representing a limited partner interest in Enviva Partners, LP issued and outstanding immediately prior to the conversion was automatically converted into one share of common stock, par value $0.001 per share, of Enviva Inc.
Our common units representing limited partner interests in the Partnership (“common units”) arestock is traded on the New York Stock Exchange (“NYSE”) under the symbol “EVA.”
Holders of Record
As of February 15, 2021,28, 2022, there were 40,023,10566.6 million shares of common unitsstock outstanding held by seven unitholders47 stockholders of record. Because many shares of our common unitsstock are held by brokers and other institutions on behalf of unitholders,our stockholders, we are unable to estimate the total number of unitholdersstockholders represented by these stockholders of record.
Dividend Policy
Subsequent to the Conversion, we intend to continue to pay a quarterly dividend to our stockholders in line with the levels of cash distributions per unit that we paid to unitholders of record. As of February 15, 2021, our sponsor held approximately 34% ofEnviva Partners, LP prior to the common units.
Cash Distribution Policy
General
Our partnership agreement provides that our General Partner will make a determination as to whether to make a distribution, but our partnership agreement does not require usConversion. However, the decision to pay distributions at any time or in any amount. Instead,future dividends is solely within the discretion of, and subject to approval by, our board of directorsdirectors. Our board of our General Partner adopted a cash distribution policy that sets forth our General Partner’s intentiondirectors’ determination with respect to any such dividends, including the distributions to be made to unitholders. Pursuant to our cash distribution policy, within 60 days afterrecord date, the end of each quarter, we intend to distribute topayment date and the holders of common units on a quarterly basis at least the minimum quarterly distribution of $0.4125 per unit, or $1.65 on an annualized basis, to the extent we have sufficient cash after establishment of cash reserves and payment of fees and expenses, including payments to our General Partner and its affiliates.
The board of directors of our General Partner may change the foregoing distribution policy at any time and from time to time, and even if our cash distribution policy is not modified or revoked, theactual amount of distributions paid underthe dividend, will depend upon our policyresults of operations, financial condition, liquidity, capital requirements, contractual restrictions, restrictions imposed by applicable law and other factors that the decision to make any distribution is determined by our General Partner. Our partnership agreement does not contain a requirement for us to pay distributions to our unitholders, and there is no guarantee that we will pay any specific distribution level, or any distribution, onboard deems relevant at the units in any quarter. However, our partnership agreement does contain provisions intended to motivate our General Partner to make steady, increasing and sustainable distributions over time.
Please read Part II, Item 7. “Management’s Discussion and Analysistime of Financial Condition and Results of Operations—Liquidity and Capital Resources—Senior Secured Revolving Credit Facility” for a discussion of the provisions included in our senior secured revolving credit facility that may restrict our ability to pay distributions to our unitholders.
General Partner Interest and Incentive Distribution Rights
Our General Partner owns a non-economic general partner interest in us, which does not entitle it to receive cash distributions. Our sponsor owns the incentive distribution rights and may in the future own common units or other equity interests in us and will be entitled to receive distributions on any such interests.
Incentive distribution rights represent the right to receive increasing percentages (15.0%, 25.0% and 50.0%) of quarterly distributions from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Our sponsor currently holds all of the incentive distribution rights, but may transfer these rights separately from the general partner interest.determination.
Securities Authorized for Issuance under Equity Compensation Plans
Please read Part III, Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”Matters—Equity Compensation Plan Information” for information regarding our equity compensation plans.
Unregistered Sales of Securities.
We did not have any sales of unregistered equity securities during the fiscal year ended December 31, 2021 that we have not previously reported on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.
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ITEM 6. SELECTED FINANCIAL DATARESERVED
Not applicable.
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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our historical performance, financial condition and future prospects should be read in conjunction with Part I, Item 1. “Business” and the consolidated financial statements in Part II, Item 8. “Financial Statements and Supplementary Data.” References in this Annual Report to the “Partnership,” “we,” “our,” “us” or similar expressions refer to
On December 31, 2021, Enviva Partners, LP including its subsidiaries.(the “Partnership”) converted from a Delaware limited partnership to a Delaware corporation (the “Conversion”) named “Enviva Inc.” References to “Enviva,” the “Company,” “we,” “us,” or “our” refer to (i) Enviva Inc. and its subsidiaries for the periods following the Conversion and (ii) Enviva Partners, LP and its subsidiaries for periods prior to the Conversion, except where the context otherwise requires. References to common units for periods prior to the Conversion refer to common units of Enviva Partners, LP, and references to common stock for periods following the Conversion refer to shares of common stock of Enviva Inc. As a result of the Conversion, the primary financial impact to the consolidated financial statements contained herein consisted of (i) reclassification of partnership capital accounts to equity accounts reflective of a corporation and (ii) income tax effects.
References to “our former sponsor” refer to Enviva Holdings, LP, and, where applicable, its wholly owned subsidiaries Enviva MLP Holdco, LLC and Enviva Development Holdings, LLC. References to “our former General Partner” refer to Enviva Partners GP, LLC, a wholly owned subsidiary of Enviva Holdings, LP. References to “Enviva Management Company” refer to Enviva Management Company, LLC, a wholly owned subsidiary of Enviva Holdings, LP, together with its affiliates that provide services to us. References to “our employees” refer to the employees of Enviva Management Company and its affiliates who provide services to the Partnership. Please read Cautionary Statement Regarding Forward‑Looking Statements on page 1 and Part 1, Item 1A. “Risk Factors” for information regarding certain risks inherent in our business.
For a discussion of our results of operations for the years ended December 31, 2019 and 2018, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2019, filed with the U.S. Securities and Exchange Commission on February 26, 2020.
Basis of Presentation
In April 2019, we acquired from our sponsor all of the Class B units of Enviva Wilmington Holdings, LLC (the “Hamlet JV,” and such acquisition, the “Hamlet Drop-Down”). The Hamlet JV owns a wood pellet production plant in Hamlet, North Carolina (the “Hamlet plant”). We are the managing member of the Hamlet JV, which is partially owned by John Hancock Life Insurance Company (U.S.A.) and certain of its affiliates (collectively, where applicable, “John Hancock”). We accounted for the Hamlet JV as a consolidated subsidiary, not as a joint venture, following the Hamlet Drop-Down. For more information regarding our rights and obligations with respect to the Hamlet JV, see Note 17, Partners’ Capital-Hamlet JV.
Business Overview
We are a growth-oriented company originally formed as a Delaware limited partnership formed in 2013 that converted to a Delaware corporation named “Enviva Inc.” We develop, construct, acquire, and own and operate, fully contracted wood pellet production plants where we aggregate a natural resource, wood fiber, and process it into a transportable form, wood pellets.dry, densified, uniform pellets that can be effectively stored and transported around the world. We primarily sell a significant majority of our wood pellets through long-term, take-or-pay off-take contracts with creditworthy customers in the United Kingdom, Europethe European Union, and increasinglyJapan, who use our pellets to displace coal and other fossil fuels to generate renewable power and heat as part of their efforts to accelerate the energy transition from conventional energy generation to renewable energy generation. Increasingly, our customers are also using our pellets as renewable raw material inputs to decarbonize hard-to-abate sectors like steel, cement, lime, chemicals, and aviation fuels. Collectively, the wood pellets we produce are viewed by our customers as a critical component of their efforts to reduce life-cycle greenhouse gas emissions in Japan. their core energy generation or industrial manufacturing processes, and mitigate the impact of climate change.
We own and operate nineten plants (collectively, “our plants”) with a combined production capacity of approximately 5.36.2 million metric tons (“MT”) of wood pellets per year (“MTPY”) in Virginia, North Carolina, South Carolina, Georgia, Florida and Mississippi, the production of which is fully contracted, through 2025.with many of our contracts extending well into the 2040s. We export our wood pellets to global markets through our wholly owned dry-bulk, deep-water marine terminal at the Port of Chesapeake, Virginia, (the “Chesapeake terminal”) and terminal assets at the Port of Wilmington, North Carolina, (the “Wilmington terminal”)the Port of Pascagoula, Mississippi, and from third-party deep-water marine terminals in Savannah, Georgia, (the “Savannah terminal”), Mobile, Alabama, (the “Mobile terminal”) and Panama City, Florida (the “Panama City terminal”).Florida. All of our facilities are located in geographic regions with low input costs and favorable transportation logistics. Owning these cost-advantaged assets the output from which is fully contracted through 2025, in a rapidly expanding industry provides us with a platform to generate stable and growing cash flows. Our plants are sited in robust fiber baskets providing stable pricing for the low-grade fiber used to produce wood pellets. Our raw materials are byproducts of traditional timber harvesting, principally low-value wood materials, such as trees generally not suited for sawmilling or other manufactured forest products, and tree tops and limbs, understory, brush, and slash that are generated in a harvest.
Our sales strategy is to fully contract the wood pellet production from our plants under long-term, take-or-pay off-take contracts with a diversified and creditworthy customer base. Our long-term off-take contracts typically provide for fixed-price deliveries that mayoften include provisions that escalate the price over time and provide for other margin protection. During 2020,2021, production capacity from our wood pellet production plants, andtogether with wood pellets sourced from our affiliates and third parties, werewas approximately equal to the contracted volumes under our existing long-term, take-or-pay off-take contracts. Our long-term, take-or-pay off-take contracts provide for a product sales backlog of $14.6$21.2 billion and have a total weighted-average remaining term of 12.814.5 years from February 1, 2021. Under our current product sales backlog, our plants are fully contracted through 2025. Assuming all volumes under the firm and contingent long-term off-take contracts held by our sponsor were included with our product sales backlog for firm and contingent contracted product sales, our product sales backlog would increase to $19.9 billion and the total weighted-average remaining term from February 1, 2021 would increase to 14.0 years.2022.
Our largest customers use our wood pellets as a substitute fuel for coal in dedicated biomass or co-fired coal power plants. Wood pellets serve as a suitable “drop-in” alternative to coal because of their comparable heat content, density, and form. Due to the
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uninterruptible nature of our customers’ fuel consumption, our customers require a reliable supply of wood pellets that meet stringent product specifications. We have built our operations and assets to deliver and certify the highest levels of product
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quality and our proven track record of reliable deliveries enables us to charge premium prices for this certainty. In addition to our customers’ focus on the reliability of supply, they are concerned about the combustion efficiency of the wood pellets and their safe handling. Because combustion efficiency is a function of energy density, particle size distribution, ash/inert content, and moisture, our customers require that we supply wood pellets meeting minimum criteria for a variety of specifications and, in some cases, provide incentives for exceeding our contract specifications.
Recent Developments
Georgia Biomass AcquisitionBasis of Presentation
On July 31, 2020, weOctober 14, 2021, the Partnership entered into and closed on an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Partnership, Enviva Holdings, LP (“Holdings”), Enviva Partners Merger Sub, LLC (“Merger Sub”), and the limited partners of Holdings (the “Holdings Limited Partners”) set forth in the Merger Agreement. Pursuant to the terms of the Merger Agreement, (a) the Company acquired our former sponsor and our former General Partner and (b) the incentive distribution rights held by our former sponsor were cancelled and eliminated (collectively, the “Simplification Transaction”). In connection with the Simplification Transaction, the Company acquired certain assets under development, as well as off-take contracts in varying stages of negotiation. The consolidated financial statements have been retroactively recast to reflect the Simplification Transaction as if the Simplification Transaction occurred on March 18, 2010, the date on which Holdings was originally organized, instead of October 14, 2021, the closing date of the Simplification Transaction.
We own all of the limited liability company interests in Georgia Biomass HoldingClass B units of Enviva Wilmington Holdings, LLC a Georgia limited liability company (“Georgia Biomass”) and the indirect owner of a wood pellet production plant located in Waycross, Georgia (the “Waycross plant”), for total consideration of $164.0 million in cash, after accounting for certain adjustments (the “Georgia Biomass Acquisition”“Hamlet JV”). The Waycross plant has been in operation since 2011 and has a production capacity of 800,000 MTPY. The Waycross plant terminals its production at a two-dome pellet export terminal with a storage capacity of 50,000 MT at the Port of Savannah, Georgia pursuant to a lease and associated terminal services agreement effective through 2028. Approximately 500,000 MTPY of the Waycross plant’s production is contracted under separate agreements to one of our existing customers through 2024. In August 2020, Georgia Biomass converted to a limited liability company organized under the laws of the State of Delaware under the name Enviva Pellets Waycross Holdings Sub, LLC (“Waycross”).
Greenwood Drop-Down
On July 1, 2020, we acquired from our sponsor all of the limited liability company interests in Enviva Pellets Greenwood Holdings II, LLC (“Greenwood Holdings II”), the indirect owner of Enviva Pellets Greenwood, LLC, whichHamlet JV owns a wood pellet production plant in Greenwood, SouthHamlet, North Carolina (the “Greenwood“Hamlet plant”),. We are the managing member of the Hamlet JV, which is a consolidated subsidiary partially owned by a third party. For more information regarding our rights and obligations with respect to the Hamlet JV, see Note 17, Equity-Hamlet JV.
Recent Developments
Simplification Transaction
In October 2021, we closed the Simplification Transaction and acquired all of the ownership interests in our former sponsor and eliminated all outstanding incentive distribution rights in exchange for a purchase price16.0 million common units, which were distributed to the owners of $129.7our former sponsor.
The owners of our former sponsor agreed to reinvest in our common stock all dividends from 9.0 million after accounting for certain adjustments and assumption of a $40.0the 16.0 million third-party promissory note bearing interest at 2.5% per year that we assumed at closing (such transaction, the “Greenwood Drop-Down”). The Greenwood Drop-Down was an asset acquisition between entities under common control and accounted for on the carryover basis of accounting. Accordingly, the consolidated financial statements for the period beginning July 1, 2020 reflect the acquisition.
On the date of andunits issued in connection with the Greenwood Drop-Down, our sponsor assigned five biomass off-take contracts to us (collectively,Simplification Transaction during the “Associated Off-Take Contracts”). The Associated Off-Take Contracts callperiod beginning with the distribution for aggregate annual deliveriesthe third quarter of 1.4 million MTPY and mature between 2031 and 2041. Our sponsor also assigned to us fixed-rate shipping contracts with aggregate annual shipping volume2021 through the fourth quarter of 1.4 million MTPY. The Associated Off-Take Contracts were assigned to fully contract wood pellets produced by the Greenwood plant and Waycross plant. The shipping contracts were assigned to facilitate transportation of those produced wood pellets.
The Greenwood plant current production capacity is 500,000 MTPY of wood pellets and transports its production via rail service to our terminal assets at the Port of Wilmington, North Carolina. We expect to invest a total of $28.0 million to expand the Greenwood plant’s production capacity to 600,000 MTPY. We expect to complete the expansion, which is currently underway, by year-end 2021.
Greenwood Make-Whole Agreement
2024. On the date of the Greenwood Drop-Down,Simplification Transaction, the non-management owners of our former sponsor held 27.7 million common units.
As a result of the Simplification Transaction, we entered intonow perform the business activities previously performed by our former sponsor, including corporate, commercial, sales and marketing, communications, public affairs, sustainability, development, and construction activities. We plan to construct fully contracted wood pellet production plants and deep-water marine terminals using our “build and copy” model as a make-whole agreementpart of our organic growth initiatives. We expect the cost to construct such assets to be lower than our historical cost of acquiring them from our former sponsor in drop-down acquisitions.
In addition, we acquired four existing take-or-pay off-take contracts with investment grade-rated counterparties, a fully contracted plant in Epes, Alabama currently under development (the “Epes plant”), and a prospective production plant in Bond, Mississippi in the Simplification Transaction. The off-take contracts we acquired have an aggregate revenue backlog of $4.4 billion and a weighted-average term of 19 years, with an associated base volume of 21 million metric tons of wood pellets. The Epes plant is designed and permitted to produce 1.1 million MTPY of wood pellets. The Bond plant is being developed to produce 1.1 million MTPY of wood pellets.
In connection with the Simplification Transaction, our existing management services fee waivers (the “MSA Fee Waivers”) and other support agreements with our former sponsor pursuantwere consolidated, fixed, and novated to whichcertain owners of our sponsor agreedformer sponsor. Under the consolidated support agreement, we are entitled to reimburse usreceive quarterly payments (the “Support Payments”) in an aggregate amount of up to $55.5 million with respect to periods from the fourth quarter of 2021 through the first quarter of 2024.
C-Corporation Conversion
The Partnership converted from a Delaware limited partnership to a Delaware corporation effective December 31, 2021; consequently, results for any construction costs incurred for the planned expansionperiods prior to December 31, 2021 reflect Enviva as a limited partnership, not a corporation. The primary financial impacts of the Greenwood plant in excessConversion to the consolidated financial statements were (i) reclassification of $28.0 million.
Greenwood Management Services Fee Waiver
partnership capital accounts to equity accounts reflective of a corporation and (ii) income tax effects. On the date of the Greenwood Drop-Down, we entered into an agreement with Enviva Management Company pursuant to which (1) an aggregate of approximately $37.0 million in management services and other fees that otherwise would be owed by us under our management services agreement (“MSA”) with Enviva Management Company will be waived with respect to the period from the closing of the Greenwood Drop-Down through the fourth quarter of 2021 and (2) Enviva Management Company will continue to waive certain management services and other fees during 2022 unless and until the Greenwood plant’s production volumes equal or exceed 50,000 MT in any calendar month, inConversion, each case, to provide cash flow support to us during the planned expansion of the Greenwood plant. During the year ended December 31, 2020, $18.0 million of MSA fees were waived, of which $9.9 million was included in cost of goods sold and $8.1 million was included in related-party management services fees in general and administrative expenses.
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Tack-On Notes Issuancecommon unit representing a limited partner interest in the Partnership issued and outstanding immediately prior to the Conversion was exchanged for one share of common stock of the Company, par value $0.001 per share.
On July 15, 2020,Issuance of Common Units and Common Shares
In June 2021, we issued an additional $150.0 million in aggregate principal amount of our 6.5% senior unsecured notes due January 15, 2026 (the “2026 Notes ”) at an offering price of 103.75% of the principal amount, which implied an effective yield to maturity of approximately 5.7%. We received net proceeds of approximately $153.6 million from the offering after deducting discounts and commissions and offering costs.
Private Placement of Common Units
On June 18, 2020, we entered into a Common Unit Purchase Agreement (the “Unit Purchase Agreement”) with certain investors to sell 6,153,8464,925,000 common units in a private placement at a price of $32.50$45.50 per common unit for grosstotal net proceeds of $200.0$214.5 million, (the “Private Placement”after deducting $9.5 million of issuance costs. The net proceeds partially financed the drop-down of the production plant under construction in Lucedale, Mississippi and the terminal at the Port of Pascagoula, Mississippi,from our former sponsor and partially financed our development activities to expand our wood pellet production plants in Sampson, North Carolina, Hamlet, North Carolina, and Cottondale, Florida (collectively the “Multi-Plant Expansions”).
In January 2022, we issued 4,945,000 common shares at a price of $70.00 per common share for total net proceeds of $334.0 million, after deducting $12.2 million of issuance costs. We usedintend to use the net proceeds of $190.8$334.0 million from the Private Placement to fund a portion of our capital expenditures related to ongoing development projects. We initially used the consideration for each of the Greenwood Drop-Down and the Georgia Biomass Acquisition.
Pursuantnet proceeds to the Unit Purchase Agreement, we entered into a registration rights agreement (the “Registration Rights Agreement”) with the investors in connection with the closing of the Private Placement, pursuant to which we agreed to file and maintain a registration statement (the “Shelf Registration Statement”) with respect to the resale of the common units on the terms set forth therein. The Registration Rights Agreement also provides certain investors with customary piggyback registration rights. On July 10, 2020, we filed the Shelf Registration Statement and on July 20, 2020, the Shelf Registration Statement was declared effective.repay borrowings under our senior secured revolving credit facility.
Financing Activities
Our net proceeds of $190.8 million from the Private Placement and the net proceeds of the tack-on offering of the 2026 Notes of $153.6 million were used primarily to pay for the $129.7 million purchase price for the Greenwood Drop-Down, and to pay $164.8 million of the purchase price for the Georgia Biomass Acquisition.
Mid-Atlantic Expansions
During 2019,In April 2021, we started constructionamended our senior secured revolving credit facility to increase the aggregaterevolving credit commitments from $350.0 million to $525.0 million, extend the maturity from October 2023 to April 2026, increase the letter of credit commitment from $50.0 million to $80.0 million, and reduce the cost of borrowing by 25 basis points. In December 2021, we amended our senior secured revolving credit facility to increase the revolving credit commitments from $525.0 million to $570.0 million and to permit the issuance of commercial letters of credit.
Capacity Expansion and Development Activities
We completed our expansion project at our Northampton, North Carolina wood pellet production plant and are commissioning the recently expanded capacity at our Southampton, Virginia plant. We expect each plant to reach its expanded nameplate production capacity of approximately 750,000 and 760,000 MTPY, respectively, during 2022.
We are commissioning the expanded capacity of our plants in Northampton, North Carolina (the “Northampton plant”), and Southampton, Virginia (the “Southampton plant”) (together, the “Mid-Atlantic Expansions”) by approximately 400,000 MTPY. In 2021, we completed the construction of the Mid-Atlantic Expansions and are in the process of ramping the expansions. As of December 31, 2020, we have paid approximately $120.0 million,Greenwood plant and expect production capacity to pay approximately $10.0 millionincrease to 600,000 MTPY during 2021, in connection with the expansions.2022.
Commitment to Achieve Carbon-Neutral Operations
Consistent with our mission to displace coal, grow more trees, and fight climate change, we and our sponsor recently announced our commitment to become “net-zero” in GHGgreenhouse gas (“GHG”) emissions from our operations by 2030. The product we manufacture helps reduce the lifecycle GHG emissions of our customers, but we believe we must also do our part within our operations to mitigate the impacts of climate change. We expect to accomplish neutrality with respect to our Scope 1 emissions (i.e., direct emissions from our manufacturing) by improving energy efficiency and adopting lower-carbon processes, as well as through investment in carbon offsets. We also plan to neutralize our Scope 2 emissions (i.e., indirect emissions from energy we purchase) by using 100% renewable energy by 2030 through the purchase of renewable electricity and/or onsite generation where practicable. Moreover, we will seek to proactively engage with our suppliers, transportation partners, and other stakeholders to drive innovative improvements in our supply chain to reduce our Scope 3 emissions (i.e., indirect emissions in our value chain). We intend to report our Scopes 1, 2, and 3 emissions annually and fully meet the requirements of CDP (formerly known as the Carbon Disclosure Project) by 2022. Although it is difficult to project the incremental cost to our operations in 2030, we do not expect any material impact to our financial performance as a result of our efforts to achieve “net-zero” in GHG emissions from our operations. For more information, refer to the risk factor titled “Increasing attention to ESG matters, including our net-zero goals and our failure to successfully achieve them, could adversely affect our business.”
Outbreak of the Novel Coronavirus
The outbreak of a novel strain of coronavirus (“COVID-19”) has significantly adversely impacted global markets and continues to present global public health and economic challenges. AlthoughIn the fullthird quarter of 2021, our contractors and supply chain partners experienced labor-related, and other challenges associated with COVID-19 that had a temporal, but more pronounced than anticipated, impact on our operations and project execution schedule. In the fourth quarter of 2021, the prevalence of the Omicron variant of COVID-19 is unknown and rapidly evolving,increased rates of infection across areas in which we operate affected the availability of healthy workers from time to date,time at our operationsfacilities, and we experienced increased rates of absence in our hourly workforce as our workers who contracted COVID-19 quarantined at home. These absences contributed to reduced facility availability and in some cases, reduced aggregate production levels. We believe that these challenges were short-term in nature, and based on the actions we have not been materially impacted bytaken and the outbreak.plans we have in place, we believe these issues are beginning to be behind us.
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We have taken prescriptive safety measures including social distancing, hygienic policies and procedures, and other steps recommended by the Centers for Disease Control and Prevention (the “CDC”), and. We adopted the CDC’s risk management approach sinceat the beginning of the outbreak and have established risk levels based on the degree to which the virus has spread in a given community and the nature of the work performed at that location. Within our field operations, we have continued operations largely as normal with the additional precautionary measures; however, we continue to monitor local data
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on a daily basis and have prioritized putting the right plans, procedures, and measures in place to mitigate the risk of exposure and infection and the related impacts to our business. We have also facilitated access for our employees to receive vaccines at our locations and we provide ongoing financial incentives for our employees to remain up to date with their vaccinations, in accordance with CDC guidelines.
We specifically designed our operations and logistics systems with flexibility and redundancies so they are capable of effectively responding to unforeseen events. We operate a portfolio of nineten wood pellet production plants geographically dispersed across the Southeast U.S. We export our product from a portfolio of five bulk terminals and transport it to our customers under long-term, fixed-price shipping contracts with multiple shipping partners. These operations currently are unaffected by COVID-19.
In March 2020, the United States declared the COVID-19 pandemic a national emergency, and several states and municipalities, including states in which we own assets or conduct business, have declared public health emergencies and taken extraordinary actions in response, including issuing “stay-at-home” orders and similar mandates (“Orders”) for many businesses to curtail or cease normal operations. To date, we have not been materially impacted by the Orders, which exempt or exclude businesses that have been designated essential critical infrastructure, such as ours, from various restrictions they impose.
As of December 31, 2020, we had liquidity, which included cash on hand and availability under our $350.0 million revolving credit facility of $229.7 million, and we have no debt maturities until 2023.States. Our wood pellet production capacity is committed under long-term, take-or-pay off-take contracts with fixed pricing and fixed volumes that are not impacted by the market prices of crude oil, natural gas, power or heat. Furthermore, mostWe export our product from a portfolio of our current deliveries aresix bulk terminals and transport it to Europe, where they fuel grid-critical base load, dispatchable generation facilities that provide power and heat required for local communities to navigate through their own COVID-19 responses. As of December 31, 2020, each of our customers is in complianceunder long-term, fixed-price shipping contracts with their agreements with us, including payment terms.
We do, however, remain vigilant about the unfolding global crisis and continue to monitor and manage the potential health, safety, business and other risks associated with the COVID-19 pandemic. Nonetheless, wemultiple shipping partners. Our shipping operations have not experienced these issues in any significant way to date, and we have plans that we believe would mitigate their potential impact if we were to face such issues in the future.been affected by COVID-19.
Factors Impacting Comparability of Our Financial Results
Greenwood Drop-DownWaycross
The Greenwood Drop-Down was an asset acquisition between entities under common control and accounted for onOn July 31, 2020, we acquired all of the carryover basis of accounting. Accordingly, the consolidated financial statements for the period beginning July 1, 2020 reflect the acquisition. For more information regarding the Greenwood Acquisition, see Note 1, Description of Business and Basis of Presentation-Basis of Presentation-Enviva Pellets Greenwood and Note 3, Transactions Between Entities Under Common Control.
limited liability interests in Georgia Biomass Acquisition
Holding LLC, a Georgia limited liability company and the indirect owner of a wood pellet production plant located in Waycross, Georgia (the “Waycross plant,”) for total consideration of $164.0 million in cash, after accounting for certain adjustments (the “Georgia Biomass Acquisition”). The Georgia Biomass Acquisition was recorded as a business combination and accounted for using the acquisition method. Assets acquired and liabilities assumed were recognized at fair value on the acquisition date of July 31, 2020, and the difference between the fair value of consideration transferred, which excludes acquisition-related costs, and the fair values of the identified net assets acquired, was recognized as goodwill. For more information regarding the Georgia Biomass Acquisition, see Item 8. Financial Statements and Supplemental Data, Note 1, Description of Business and Basis of Presentation-Georgia Biomass Holding LLC and Note 4, Acquisition.
Private Placement of Common Units
In June 2020, we issued 6,153,846 common units in a private placement offering for net proceeds of approximately $190.8 million, net of $9.2 million of issuance costs.
Hamlet Drop-Down
On April 2, 2019, we acquired from our sponsor all of the Class B units of Enviva Wilmington Holdings, LLC (the “Hamlet JV,” and such acquisition, the “Hamlet Drop-Down”). We are the managing member of the Hamlet JV, which is partially owned by John Hancock Life Insurance Company (U.S.A.) and certain of its affiliates (collectively, where applicable, “John Hancock”).
The Hamlet JV owns a wood pellet production plant in Hamlet, North Carolina (the “Hamlet plant”) and has a firm 15-year take-or-pay off-take contract to supply a customer with nearly 1.0 million MTPY of wood pellets following a ramp period through 2034. Prior to the Hamlet Drop-Down, we already had off-take contracts with the Hamlet JV to supply 470,000 MTPY of the volumes to be delivered pursuant to the 1.0 million MTPY contract; consequently, we acquired 500,000 MTPY in
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incremental product sales volumes in connection with the Hamlet Drop-Down. The Hamlet plant became operational during the second quarter of 2019.
We accounted for the Hamlet JV as a consolidated subsidiary, not as a joint venture, following the Hamlet Drop-Down on April 2, 2019. We included all accounts of the Hamlet JV in our consolidated results as of April 2, 2019 as the Class B Units represent a controlling interest in the Hamlet JV. We are generally unrestricted in managing the assets and cash flows of the Hamlet JV; however, certain decisions, such as those relating to the issuance and redemption of equity interests in the Hamlet JV, guarantees of indebtedness and fundamental changes, including mergers and acquisitions, asset sales and liquidation and dissolution of the Hamlet JV, require the approval of the members of the Hamlet JV. For more information regarding the Hamlet Drop-Down, see Note 1, Description of Business and Basis of Presentation-Basis of Presentation-Enviva Wilmington, Holdings, LLC and Note 15, Related-Party Transactions-Drop-Down Agreements-Hamlet Drop-Down.
2026 Notes
During December 2019, we issued $600.0 million in principal amount of the6.5% senior unsecured notes due January 15, 2026 Notes in private placements under Rule 144A and Regulation S of the Securities Act of 1933, as amended (the “Securities Act”“2026 Notes”). We received gross proceeds of approximately $601.8 million from the offerings and net proceeds of approximately $595.8 million after deducting commissions and expenses. We used the net proceeds from the offerings (1) to redeem our existing $355.0 million principal amount of 8.5% senior unsecured notes due 2021, including payment of the related redemption premium, (2) to repay borrowings under our senior secured revolving credit facility, including payment of the related accrued interest and (3) for general partnership purposes. Interest payments are due semi-annually in arrears on January 15 and
In July 15 of each year, commencing July 15, 2020.
As discussed above in “Recent Developments,”2020, we issued an additional $150.0 million in aggregate principal amount of our 6.5% the 2026 Notes at an offering price of 103.75% of the principal amount, which implied an effective yield to maturity of approximately 5.7%. We received net proceeds of approximately $153.6 million from the offering after deducting discounts and commissions and offering costs.
Senior Secured Green Term Loan Facility
In February 2021, our former sponsor entered into a senior secured green term loan facility (the “Green Term Loan”) providing for $325.0 million principal amount, maturing in July 2020.February 2026. Interest was priced at LIBOR plus 5.50% with a LIBOR floor of 1.00%. Our former sponsor received gross proceeds of $325.0 million and net proceeds of approximately $317.2 million after deducting original issue discount, commissions, and expenses. Our former sponsor used the net proceeds (1) to purchase the noncontrolling interest in Enviva JV Development Company, LLC (the “ Development JV”), (2) to repay the Riverstone Loan (see Item 8. Financial Statements and Supplemental Data, Note 15, Related-Party Transactions), (3) to fund capital expenditures and liquidity reserve cash accounts, and (4) for general purposes.
In October 2021, our former sponsor repaid in full the Green Term Loan and recognized a $9.4 million loss in early retirement of debt resulting from the write-off of unamortized debt issuance costs and original issue discount.
How We Generate Revenue
Overview
We primarily earn revenue by supplying wood pellets to our customers under off‑take contracts, the majority of which are long-term in nature. Our off-take contracts are considered “take-or-pay” because they include a firm obligation of the customer to take a fixed quantity of product at a stated price and provisions that require that we be compensated in the case of a
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customer’s failure to accept all or a part of the contracted volumes or termination of a contract by a customer. Each of our long-term off-take contracts defines the annual volume of wood pellets that a customer is required to purchase and we are required to sell, the fixed price per MT for product satisfying a base net calorific value and other technical specifications. These prices are fixed for the entire term, and are subject to adjustments which may include annual inflation-based adjustments or price escalators, price adjustments for product specifications, as well as, in some instances, price adjustments due to changes in underlying indices. In addition to sales of our product under these long-term off-take contracts, we routinely sell wood pellets under shorter-term contracts, which range in volume and tenor and, in some cases, may include only one specific shipment. Because each of our off-take contracts is a bilaterally negotiated agreement, our revenue over the duration of such contracts does not generally follow observable current market pricing trends. Our performance obligations under these contracts include the delivery of wood pellets, which are aggregated into MT. We account for each MT as a single performance obligation. Our revenue from the sale of wood pellets we produce is recognized upon satisfaction of the performance obligation when control transfers to the customer at the time of loading wood pellets onto a ship.
Depending on the specific off-take contract, shipping terms under our long-term contracts are either Cost, Insurance and Freight (“CIF”), Cost and Freight (“CFR”), or Free On Board (“FOB”). Under a CIF contract, we procure and pay for shipping costs, which include insurance and all other charges, up to the port of destination for the customer. Under a CFR contract, we procure and pay for shipping costs, which include insurance (excluding marine cargo insurance) and all other charges, up to the port of destination for the customer. Shipping under CIF and CFR contracts after control has passed to the customer is considered a fulfillment activity rather than a performance obligation and associated expenses are accrued and included in the price to the customer. Under FOB contracts, the customer is directly responsible for shipping costs.
In some cases, we may purchase shipments of product from third-party suppliers and resell them in back-to-back transactions (“purchase and sale transactions”). We typically are the principal in such transactions because we control the wood pellets prior to transferring them to the customer and therefore recognize related revenue on a gross basis.
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Other Revenue
Other revenue includes fees from customers related to cancellations, deferrals or accelerations of shipments and the Commercial Services.certain sales and marketing, scheduling, sustainability, consultation, shipping, and risk management services (collectively, “Commercial Services”).
We recognize third- and related-partythird-party terminal services revenue ratably over the contract term. Terminal services are performance obligations that are satisfied over time, as customers simultaneously receive and consume the benefits of the terminal services we perform. The consideration is generally fixed for minimum quantities and services above-minimumbeyond minimum quantities are generally billed based on a per-MT rate.
Contracted Backlog
As of February 1, 2021,2022, we had approximately $14.6$21.2 billion of product sales backlog for firm and contingent contracted product sales to our long-term off-take customers and have a total weighted-average remaining term of 12.814.5 years compared to approximately $10.6$19.9 billion and a total weighted-average remaining term of 11.414.0 years as of February 1, 2020.2021. Contracted backlog represents the revenue to be recognized under existing contracts assuming deliveries occur as specified in the contracts. Contracted future product sales denominated in foreign currencies, excluding revenue hedged with foreign currency forward contracts, are included in U.S. Dollars at February 1, 20212022 forward rates. The contracted backlog includes forward prices, including inflation, as well as foreign currency and commodity prices. The amountcontracted backlog also includes the effects of related foreign currency derivative contracts. Please read Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” and Item 8. “Financial Statements and Supplementary Data—Note 10, Derivative Instruments”Instruments, for more information regarding our foreign currency forward contracts.
Our expected future product sales revenue under our contracted backlog as of February 1, 20212022 is as follows (in millions):
Period from February 1, 20212022 to December 31, 20212022$1,0331,257 
Year ending December 31, 202220231,2741,437 
Year ending December 31, 20232024 and thereafter12,28418,478 
Total product sales contracted backlog$14,59121,172 
Assuming all volumes under the firm and contingent off-take contracts held by our sponsor were included with our product sales contracted backlog for firm and contingent contracted product sales, the total weighted-average remaining term as
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Table of February 1, 2021 would increase to 14.0 years and product sales contracted backlog would increase to $19.9 billion as follows (in millions):Contents
Period from February 1, 2021 to December 31, 2021$1,032 
Year ending December 31, 20221,325 
Year ending December 31, 2023 and thereafter17,537 
Total product sales contracted backlog$19,894 
Included in the product sales contracted backlog above are $2.9 billion of contingent contracts held by our sponsor.
Costs of Conducting Our Business
Cost of Goods Sold
Cost of goods sold includes the costs to produce and deliver our wood pellets to customers, reimbursable shipping-related costs associated with specific off-take contracts with CIF or CFR shipping terms, and costs associated with purchase and sale transactions. The primary expenses incurred to produce and deliver our wood pellets consist of raw material, production, and distribution costs.
We have strategically located our plants in the Mid-Atlantic and Gulf Coast regions of the United States, geographic areas in which wood fiber sources are plentiful and readily available. We have short-term and long-term contracts to manage the supply of raw materials into our plants. Delivered wood fiber costs include stumpage as well as harvesting, transportation, and in some cases, size reductionsize-reduction services provided by our suppliers. The majority of our product volumes are sold under off-take contracts that include cost pass-through mechanisms to mitigate increases in raw material and distribution costs.
Production costs at our production plants consist of labor, energy, tooling, repairs and maintenance, and plant overhead costs. Production costs also include depreciation expense associated with the use of our plants and equipment and any gain or loss on disposal of associated assets. Some of our off-take contracts include price escalators that mitigate inflationary pressure
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on certain components of our production costs. In addition to the wood pellets that we produce at our owned and operated production plants, we selectively purchase additional quantities of wood pellets from third- and related-partyother wood pellet producers.
Distribution costs include all transportation costs from our plants to our port locations, any storage or handling costs while the product remains at port, and shipping costs related to the delivery of our product from our port locations to our customers. Both the strategic location of our plants and our ownership or control of our deep-water terminals have allowed for the efficient and cost-effective transportation of our wood pellets. We seek to mitigate shipping risk by entering into long-term, fixed-price shipping contracts with reputable shippers matching the terms and volumes of our off-take contracts pursuant to which we are responsible for arranging shipping. Certain of our off-take contracts include pricing adjustments for volatility in fuel prices, which allow us to pass the majority of the fuel price-risk associated with shipping through to our customers.
Costs associated with purchase and sale transactions are included in cost of goods sold.
Raw material, production, and distribution costs associated with delivering our wood pellets to our owned and leased marine terminals and third- and related-partythird-party wood pellet purchase costs are capitalized as a component of inventory. Fixed production overhead, including the related depreciation expense, is allocated to inventory based on the normal capacity of the production plants. These costs areWhen the inventory is sold, the depreciation allocated to it is reflected as depreciation and amortization expense in our consolidated statements of operations, while the other fixed production overhead allocated to inventory is reflected in cost of goods sold, when inventory is sold.excluding depreciation and amortization. Distribution costs associated with shipping our wood pellets to our customers are expensed as incurred. Our inventory is recorded using the first-in, first-out method (“FIFO”). Given the nature of our inventory, the calculation of cost of goods sold is based on estimates used in the valuation of the FIFO inventory and in determining the specific composition of inventory that is sold to each customer.
Recoveries from customers for certain costs incurred at the discharge port under our off-take contracts are not considered a part of the transaction price, and therefore are excluded from product sales and included as an offset to cost of goods sold.
General and Administrative Expenses
We and our General Partner are party to the MSAs. Under the MSAs, direct or indirect internal or third-party expenses incurred are either directly identifiable or allocated to us. Our sponsor estimates the percentage of employee salaries and related benefits, third-party costs, office rent and expenses and any other overhead costs to be provided to us. Each month, our sponsor allocates the actual costs incurred using these estimates. Our sponsor also charges us for any directly identifiable costs such as goods or services provided at our request. We believe our sponsor’s assumptions and allocations have been made on a reasonable basis and are the best estimate of the costs that we would have incurred on a stand-alone basis.
How We Evaluate Our Operations
Adjusted Net Income (Loss)
We define adjusted net income (loss) as net income (loss) excluding acquisition and integration costs and other, early retirement of debt obligation, and Support Payments, adjusting for the effect of Commercial Services, and excluding interest expense associated with incremental borrowings related to a fire that occurred in February 2018 at the Chesapeake terminal (the “Chesapeake Incident”) and Hurricanes Florence and Michael (the “Hurricane Events”), early retirement of debt obligation and acquisition and integration costs, adjusting for the effect of certain sales and marketing, scheduling, sustainability, consultation, shipping, and risk management services (collectively, “Commercial Services”), and including certain non-cash waivers of fees for management services provided to us by our sponsor (collectively, “MSA Fee Waivers”). We believe that adjusted net income (loss) enhances investors’ ability to compare the past financial performanceperformance of our underlying operations with our current performance separate from certain items of gain or loss that we characterize as unrepresentative of our ongoing operations.
Adjusted Gross Margin and Adjusted Gross Margin per Metric Ton
We define adjusted gross margin as gross margin excluding asset impairmentloss on disposal of assets, non-cash equity-based compensation and disposals,other expense, depreciation and amortization, changes in unrealized derivative instruments related to hedged items, included in gross margin, non-cash unit compensation expenses and acquisition and integration costs and other, and Support Payments, and adjusting for the effect of Commercial Services and including MSA Fee Waivers.Services. We define adjusted gross margin per metric ton as adjusted gross margin per metric ton of wood pellets sold. We believe adjusted gross margin and adjusted gross margin per metric ton are meaningful measures because they compare our revenue-generating
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activities to our operating costscost of goods sold for a view of profitability and performance on a total-dollar and a per-metric ton basis. Adjusted gross margin and adjusted gross margin per metric ton primarily will primarily be affected by our ability to meet targeted production volumes and to control direct and indirect costs associated with procurement and delivery of wood fiber to our wood pellet production plants and our production and distribution of wood pellets.
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Adjusted EBITDA
We define adjusted EBITDA as net income (loss) excluding depreciation and amortization, interest expense, income tax expense (benefit), early retirement of debt obligation, non-cash unitequity-based compensation and other expense, asset impairments and disposals,loss on disposal of assets, changes in unrealized derivative instruments related to hedged items, included in gross margin and other income and expense,and acquisition and integration costs and other, and MSA Fee Waivers and Support Payments, and adjusting for the effect of Commercial Services, and including MSA Fee Waivers.Services. Adjusted EBITDA is a supplemental measure used by our management and other users of our financial statements, such as investors, commercial banks, and research analysts, to assess the financial performance of our assets without regard to financing methods or capital structure.
Distributable Cash Flow
We define distributable cash flow as adjusted EBITDA less maintenance capital expenditures, cash income tax expenses, and interest expense net of amortization of debt issuance costs, debt premium, original issue discounts, interest expense associated with the redemption of the $355.0 million of aggregate principal amount of 6.5% senior unsecured notes due 2021 (the “2021 Notes”) and, the impact from incremental borrowings related to the Chesapeake Incident and Hurricane Events.Events, and maintenance capital expenditures. We use distributable cash flow as a performance metric to compare our cash-generating performance from period to period and to compare the cash-generating performance for specific periods to the cash distributions (if any) that are expected to be paid to our unitholders.shareholders. We do not rely on distributable cash flow as a liquidity measure.
2021 Non-Recast Presentation
Our 2021 results were calculated on a recast basis in accordance with accounting principles generally accepted in the United States (“GAAP”) to reflect the consolidated performance of Enviva and our former sponsor as if Enviva had bought the former sponsor at inception instead of October 14, 2021, the closing date of the Simplification Transaction. In addition, we are also presenting results for 2021, calculated on a non-GAAP basis that combines (i) the actual performance of Enviva through October 14, 2021, the closing date of the Simplification Transaction, on a non-recast basis, and (ii) our consolidated performance, calculated on a recast basis in accordance with GAAP, inclusive of the assets and operations acquired as part of the Simplification Transaction, from the closing date through December 31, 2021 (the “Non-Recast Presentation”). We believe the non-recast presentation provides investors with relevant information to evaluate our financial and operating performance because it reflects Enviva’s actual and historically reported performance on a stand-alone basis through the closing date of the Simplification Transaction and performance on a consolidated basis from the closing date until year-end.
The Non-Recast Presentation does not reflect the recast of our historical results required under GAAP due to the Simplification Transaction and accordingly contains non-GAAP measures.
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Unless expressly stated otherwise, all results are presented on a recast basis.
The following table presents a reconciliation of net loss to adjusted EBITDA and distributable cash flow for the year ended December 31, 2021, on a recast basis and non-recast basis (in millions):
Year Ended December 31, 2021
Recast PresentationAdjustmentsNon-Recast Presentation
(in millions)
Net loss$(145.3)$112.1 $(33.2)
Add:
Depreciation and amortization92.0 (2.8)89.2 
Interest expense56.5 (11.2)45.3 
Income tax (benefit) expense(17.0)17.1 0.1 
Early retirement of debt obligation9.4 (9.4)— 
Non-cash equity-based compensation and other expense55.9 (32.4)23.5 
Loss on disposal of assets10.2 (0.1)10.1 
Changes in unrealized derivative instruments(2.7)— (2.7)
Acquisition and integration costs and other32.6 — 32.6 
MSA Fee Waivers and Support Payments25.1 36.1 61.2 
Adjusted EBITDA$116.7 $109.4 $226.1 
Less:
Interest expense net of amortization of debt issuance costs, debt premium, and original issue discount52.6 (8.3)44.3 
Maintenance capital expenditures14.0 — 14.0 
Distributable cash flow$50.1 $117.7 $167.8 
Limitations of Non-GAAP Financial Measures
Adjusted net income (loss), adjusted gross margin, adjusted gross margin per metric ton, adjusted EBITDA, and distributable cash flow, as well as our Non-Recast Presentation, are not financial measures presented in accordance with accounting principles generally accepted in the United States (“GAAP”).GAAP. We believe that the presentation of these non-GAAP financial measures provides useful information to investors in assessing our financial condition and results of operations. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measures. Each of these non-GAAP financial measures has important limitations as an analytical tool because they exclude some, but not all, items that affect the most directly comparable GAAP financial measures. You should not consider adjusted net income (loss), adjusted gross margin, adjusted gross margin per metric ton, adjusted EBITDA, or distributable cash flow, or our Non-Recast Presentation, in isolation or as substitutes for analysis of our results as reported underin accordance with GAAP.
Our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. Please see above for a reconciliation of the Non-Recast Presentation to the Recast Presentation and below for a reconciliation of each of adjusted net income (loss), adjusted gross margin and adjusted gross margin per metric ton, adjusted EBITDA, and distributable cash flow to the most directly comparable GAAP financial measure.
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Results of Operations
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020
Year Ended December 31,Change
20212020
(Recast)(Recast)
(in thousands)
Product sales$999,190 $830,528 $168,662 
Other revenue42,488 44,434 (1,946)
Net revenue1,041,678 874,962 166,716 
Cost of goods sold, excluding items below861,703 711,248 150,455 
Loss on disposal of assets10,153 8,715 1,438 
Selling, general, administrative, and development expenses(1)
175,108 129,537 45,571 
Depreciation and amortization91,966 85,892 6,074 
Total operating costs and expenses1,138,930 935,392 203,538 
Loss from operations(97,252)(60,430)(36,822)
Interest expense(56,497)(45,996)(10,501)
Early retirement of debt obligation(9,377)— (9,377)
Other income, net880 271 609 
Net loss before income tax (benefit) expense(162,246)(106,155)(56,091)
Income tax (benefit) expense(16,975)169 (17,144)
Net loss$(145,271)$(106,324)$(38,947)
(1)SeePart II, Item 8., “Financial Statements and Supplementary Data—Note 15, Related-Party Transactions
Net revenue
Revenue related to product sales for wood pellets produced or procured by us increased to $999.2 million in 2021 from $830.5 million in 2020. The $168.7 million, or 20%, increase was primarily attributable to a 16% increase in product sales volumes for the year ended December 31, 2021 as compared to the year ended December 31, 2020.
Other revenue for the years ended December 31, 2021 and 2020 included $37.3 million and $32.5 million, respectively, in payments to us for adjusting deliveries under our take-or-pay off-take contracts, which otherwise would have been included in product sales. Other revenue also included $4.1 million from Commercial Services during the year ended December 31, 2020. The $37.3 million and $36.6 million in other revenue was recognized under a breakage model based on when the pellets would have been loaded.
Cost of goods sold
Cost of goods sold increased to $861.7 million for the year ended December 31, 2021 from $711.2 million for the year ended December 31, 2020, an increase of $150.5 million, or 21%. The increase was primarily attributable to a 16% increase in sales volumes.
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Adjusted gross margin and adjusted gross margin per metric ton
Year Ended December 31,Change
20212020
(Recast)(Recast)
(in thousands, except per metric ton)
Reconciliation of gross margin to adjusted gross margin and adjusted gross margin per metric ton:
Gross margin(1)
$83,362 $72,538 $10,824 
Loss on disposal of assets10,143 8,653 1,490 
Non-cash equity-based compensation and other expense2,271 2,714 (443)
Depreciation and amortization86,471 82,523 3,948 
Changes in unrealized derivative instruments(2,673)4,328 (7,001)
Acquisition and integration costs and other397 1,517 (1,120)
Support Payments25,100 — 25,100 
Commercial Services— (4,139)4,139 
Adjusted gross margin$205,071 $168,134 $36,937 
Metric tons sold5,033 4,332 701 
Adjusted gross margin per metric ton$40.75 $38.81 $1.94 
(1)Gross margin is defined as net revenue less cost of goods sold (including related depreciation and amortization and loss on disposal of assets).
We earned adjusted gross margin of $205.1 million, or $40.75 per MT, for the year ended December 31, 2021 compared to $168.1 million, or $38.81 per MT, for the year ended December 31, 2020. The increase in adjusted gross margin was primarily due to a 16% increase in product sales volumes for the year ended December 31, 2021 as compared to the year ended December 31, 2020 and the Support Payments.
Selling, general, administrative, and development expenses
Selling, general, administrative, and development expenses were $175.1 million for the year ended December 31, 2021 and $129.5 million for the year ended December 31, 2020. The $45.6 million increase in total selling, general, administrative, and development expenses is primarily associated with the increases in acquisition and integration costs of $24.9 million primarily associated with the Simplification Transaction and Conversion and the drop-down of the production plant under construction in Lucedale, Mississippi and terminal at the Port of Pascagoula, Mississippi from our former sponsor as well as non-cash equity-based compensation and other expense of $16.8 million associated with the Simplification Transaction.
Depreciation and amortization
Depreciation and amortization expense increased to $92.0 million for the year ended December 31, 2021 from $85.9 million for the year ended December 31, 2020, an increase of $6.1 million or 7%, mainly due to the acquisition of the production plant located in Waycross, Georgia in July 2020.
Interest expense
We incurred $56.5 million of interest expense during the year ended December 31, 2021 and $46.0 million during the year ended December 31, 2020. The increase in interest expense from the prior year was primarily attributable to interest expense associated with the Green Term Loan.
Early retirement of debt obligation
In October 2021, our former sponsor repaid in full the Green Term Loan, which had a principal balance of $318.4 million at the time, and recognized a $9.4 million loss in early retirement of debt resulting from the write-off of unamortized debt issuance costs and original issue discount.
Income tax
We recorded $17.0 million of income tax benefit during the year ended December 31, 2021 and $0.2 million of income tax expense during the year ended December 31, 2020. The increase in income tax benefit of $17.2 million was primarily due to the Conversion.
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Adjusted net loss
Year Ended December 31,Change
20212020
(Recast)(Recast)
(in thousands)
Reconciliation of net loss to adjusted net loss:
Net loss$(145,271)$(106,324)$(38,947)
Acquisition and integration costs and other32,608 7,678 24,930 
Early retirement of debt obligation9,377 — 9,377 
Support Payments25,100 — 25,100 
Commercial Services— (4,139)4,139 
Interest expense from incremental borrowings related to Chesapeake Incident and Hurricane Events— 2,211 (2,211)
Adjusted net loss$(78,186)$(100,574)$22,388 
Adjusted EBITDA
 Year Ended December 31,Change
20212020
(Recast)(Recast)
(in thousands)
Reconciliation of net loss to adjusted EBITDA:
Net loss$(145,271)$(106,324)$(38,947)
Add:
Depreciation and amortization91,966 85,892 6,074 
Interest expense56,497 45,996 10,501 
Income tax (benefit) expense(16,975)169 (17,144)
Early retirement of debt obligation9,377 — 9,377 
Non-cash equity-based compensation and other expense55,924 39,528 16,396 
Loss on disposal of assets10,153 8,715 1,438 
Changes in unrealized derivative instruments(2,673)4,328 (7,001)
Acquisition and integration costs and other32,608 7,678 24,930 
Support Payments25,100 — 25,100 
Commercial Services— (4,139)4,139 
Adjusted EBITDA$116,706 $81,843 $34,863 
We generated adjusted EBITDA of $116.7 million for the year ended December 31, 2021 compared to $81.8 million for the year ended December 31, 2020. The $34.9 million increase was primarily attributable to the factors described above under the heading “Adjusted gross margin and adjusted gross margin per metric ton.”
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Distributable cash flow
The following is a reconciliation of adjusted EBITDA to distributable cash flow:
Year Ended December 31,Change
20212020
(Recast)(Recast)
(in thousands)
Adjusted EBITDA$116,706 $81,843 $34,863 
Less:
Interest expense, net of amortization of debt issuance costs, debt premium, original issue discount, and impact from incremental borrowings related to Chesapeake Incident and Hurricane Events52,574 41,206 11,368 
Maintenance capital expenditures13,981 7,952 6,029 
Distributable cash flow attributable to Enviva50,151 32,685 17,466 
Less: Distributable cash flow attributable to incentive distribution rights19,030 26,917 (7,887)
Distributable cash flow attributable to Enviva$31,121 $5,768 $25,353 
The following is a reconciliation of non-recast net (loss) income to non-recast adjusted EBITDA and non-recast adjusted EBITDA to non-recast distributable cash flow:
Year Ended December 31,Change
20212020
Non-Recast PresentationNon-Recast As Previously Reported
(in millions)
Net (loss) income$(33.2)$17.1 $(50.3)
Add:
Depreciation and amortization89.2 77.5 11.7 
Interest expense45.3 44.9 0.4 
Income tax expense0.1 0.1 — 
Non-cash equity-based compensation and other expense23.5 12.8 10.7 
Loss on disposal of assets10.1 7.0 3.1 
Changes in unrealized derivative instruments(2.7)4.3 (7.0)
Acquisition and integration costs and other32.6 7.4 25.2 
MSA Fee Waivers and Support Payments61.2 23.4 37.8 
Commercial Services— (4.1)4.1 
Adjusted EBITDA226.1 190.3 35.8 
Less:
Interest expense net of amortization of debt issuance costs, debt premium, and original issue discount44.3 40.8 3.5 
Maintenance capital expenditures14.0 8.0 6.0 
Distributable cash flow$167.8 $141.6 $26.2 
Non-recast Adjusted EBITDA increased to $226.1 million for the year ended December 31, 2021 from $190.3 million for the year ended December 31, 2020, an increase of $35.8 million, or 19%. Non-recast distributable cash flow increased to $167.8 million for the year ended December 31, 2021 from $141.6 million for the year ended December 31, 2020, an increase of $26.2 million, or 19%.
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Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
Year Ended December 31,Change
20202019
(Recast)(Recast)
(in thousands)
Product sales$830,528 $674,251 $156,277 
Other revenue44,434 9,317 35,117 
Net revenue874,962 683,568 191,394 
Cost of goods sold, excluding items below711,248 601,869 109,379 
Loss on disposal of assets8,715 3,558 5,157 
Selling, general, administrative, and development expenses(1)
129,537 98,818 30,719 
Depreciation and amortization85,892 65,565 20,327 
Total operating costs and expenses935,392 769,810 165,582 
Loss from operations(60,430)(86,242)25,812 
Interest expense(45,996)(42,042)(3,954)
Early retirement of debt obligation— (9,042)9,042 
Other income, net271 410 (139)
Loss from operations before income tax expense (benefit)(106,155)(136,916)30,761 
Income tax expense (benefit)169 (1,932)2,101 
Net loss$(106,324)$(134,984)$28,660 
(1)
Year Ended December 31,Change
20202019
(in thousands)
Product sales$830,528 $674,251 $156,277 
Other revenue (1)
44,551 10,142 34,409 
Net revenue875,079 684,393 190,686 
Cost of goods sold(1)
684,863 549,701 135,162 
Loss on disposal of assets6,978 3,103 3,875 
Depreciation and amortization76,115 50,521 25,594 
Total cost of goods sold767,956 603,325 164,631 
Gross margin107,123 81,068 26,055 
General and administrative expenses12,800 6,932 5,868 
Related-party management services agreement fee32,545 29,457 3,088 
Total general and administrative expenses45,345 36,389 8,956 
Income from operations61,778 44,679 17,099 
Interest expense(44,902)(39,344)(5,558)
Early retirement of debt obligation— (9,042)9,042 
Other income273 764 (491)
Net income (loss) before income tax expense17,149 (2,943)20,092 
Income tax expense69 — 69 
Net income (loss)$17,080 $(2,943)$20,023 
 (1) See Part II, Item 8. “Financial Statements and Supplementary Data—Note 15, Related-Party Transactions
See Part II, Item 8. “Financial Statements and Supplementary Data—Note 15, Related-Party Transactions
Net Revenuerevenue
Revenue related to product sales for wood pellets produced or procured by us increased to $830.5 million in 2020 from $674.3 million in 2019. The $156.3 million, or 23%, increase was primarily attributable to a 22% increase in product sales volumes for the year ended December 31, 2020 as compared to the year ended December 31, 2019.
Other revenue for the year ended December 31, 2020 included $32.5 million in payments to us, for adjusting deliveries under our take-or-pay off-take contracts, which otherwise would have been included in product sales.sales, for adjusting deliveries under our take-or-pay off-take contracts. Other revenue also included $4.1 million from the Commercial Services during the year ended December 31, 2020. The $32.5 million and $4.1 million in other revenue was recognized under a breakage model based on when the pellets otherwise would have been loaded.
Cost of goods sold
Total costCost of goods sold increased to $768.0$711.2 million for the year ended December 31, 2020 from $603.3$601.9 million for the year ended December 31, 2019, an increase of $164.6$109.4 million, or 27%18%. The increase was primarily attributable to a 22% increase in sales volumes and a 4% increase in depreciation and amortization expense, mainly associated with the recent acquisitions, during the year ended December 31, 2020 compared to the year ended December 31, 2019.
Gross
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Adjusted gross margin and adjusted gross margin per metric ton
Year Ended December 31,Change
20202019
(Recast)(Recast)
(in thousands, except per metric ton)
Reconciliation of gross margin to adjusted gross margin and adjusted gross margin per metric ton:
Gross margin(1)
$72,538 $16,134 56,404 
Loss on disposal of assets8,653 3,577 5,076 
Non-cash equity-based compensation and other expense2,714 — 2,714 
Depreciation and amortization82,523 61,988 20,535 
Changes in unrealized derivative instruments4,328 4,588 (260)
Acquisition and integration costs and other1,517 4,299 (2,782)
Commercial Services(4,139)4,139 (8,278)
Adjusted gross margin$168,134 $94,725 $73,409 
Metric tons sold4,332 3,564 768 
Adjusted gross margin per metric ton$38.81 $26.58 $12.23 
(1)Gross margin was $107.1is defined as net revenue less cost of goods sold (including related depreciation and amortization and loss on disposal of assets).
We earned adjusted gross margin of $168.1 million, or $38.81 per MT, for the year ended December 31, 2020 as compared to $81.1$94.7 million, or $26.58 per MT, for the year ended December 31, 2019, an2019.The increase of $26.1 million, or 32%. The $26.1 million increase in adjusted gross margin was principally attributableprimarily due to a 22% increase in product sales volumes primarily offset by increases in depreciation and amortization expense associated with the recent acquisitions, duringfor the year ended December 31, 2020 as compared to the year ended December 31, 2019.
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Adjusted gross margin and adjusted gross margin per metric ton
Year Ended December 31, 
20202019Change
(in thousands, except per metric ton)
Reconciliation of gross margin to adjusted gross margin and adjusted gross margin per metric ton:
Gross margin107,123 81,068 26,055 
Asset impairments and disposals6,978 3,103 3,875 
Non-cash unit compensation expense2,024 — 2,024 
Depreciation and amortization76,115 50,521 25,594 
Changes in unrealized derivative instruments4,328 4,588 (260)
MSA Fee Waivers10,913 5,000 5,913 
Acquisition and integration costs and other1,510 3,211 (1,701)
Commercial Services(4,139)4,139 (8,278)
Adjusted gross margin204,852 151,630 53,222 
Metric tons sold4,332 3,564 768 
Adjusted gross margin per metric ton$47.29 $42.54 $4.74 
We earned an adjusted gross margin of $204.9 million, or $47.29 per MT, for the year ended December 31, 2020 compared to $151.6 million, or $42.54 per MT, for the year ended December 31, 2019. The increase in adjusted gross margin was primarily due to factors discussed above under the heading “Gross margin.”
Adjusted gross margin for the year ended December 31, 2019 excludes $4.3 million of incremental costs, which are unrepresentative of our ongoing operations, in connection with our evaluation of a third-party wood pellet production plant we considered purchasing (the “Potential Target”). When we commenced our review, the Potential Target had recently returned to operations following an extended shutdown during a bankruptcy proceeding with the intent of demonstrating favorable operations prior to proceeding to an auction sale process; however, the Potential Target had not yet established a logistics chain through a viable export terminal, given that the terminal through which the plant historically had exported was not operational at the time and was not reasonably certain to become operational in the future. Accordingly, as part of our diligence of the Potential Target, we developed an alternative logistics chain to bring the Potential Target’s wood pellets to market and began purchasing the production of the Potential Target for a trial period. The incremental costs associated with the establishment and evaluation of this new logistics chain primarily consist of barge, freight, trucking, storage, and shiploading services. We have completed our evaluation of the alternative logistics chain and, therefore, do not expect to incur additional costs of this nature in the future.
During the quarter ended December 31, 2019, we received a non-refundable payment of $5.6 million from a customer in consideration for our performance during the quarter of certain sales and marketing, scheduling, sustainability, consultation, shipping and risk management services (collectively, “Commercial Services”) that wereCommercial Services outside of the scope of our existing take-or-pay off-take contract. The customer had requested the Commercial Services, among other things, in order to avoid its exposure to market price volatility associated with its anticipated failure to take required deliveries of certain wood pellet volumes during the fourth quarter of 2019 and first half of 2020 pursuant to the off-take contract. The Commercial Services had a value to the customer of $5.6 million. We included the entire non-refundable payment of $5.6 million in our publicly stated guidance for 2019 in our press release issued October 30, 2019.
Under GAAP, we recognized $1.5 million of the $5.6 million payment as revenue during the fourth quarter of 2019, under the breakage model of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, (“ASC 606”), and recorded the remaining $4.1 million as deferred revenue as of December 31, 2019, which was recognized as revenue during the first six months of 2020 in accordance with the original product sales schedule under the off-take contract. For presentation of our non-GAAP measures, including the Non-Recast Presentation, we included the $4.1 million in adjusted net income, adjusted gross margin, adjusted gross margin per MT, and adjusted EBITDA for the year ended December 31, 2019 as such amount relates to our performance of certain Commercial Services, which we completed and for which we were compensated in 2019. The $4.1 million increased adjusted net income, adjusted gross margin per MT, and adjusted EBITDA for the year ended December 31, 2019 and decreased such measures by an equal amount during the first six months of 2020.
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GeneralSelling, general, administrative, and administrativedevelopment expenses
TotalSelling, general, administrative, and administrativedevelopment expenses were $45.3$129.5 million for the year ended December 31, 2020 and $36.4$98.8 million for the year ended December 31, 2019. The $9.0$30.7 million increase in total selling, general, administrative, and administrativedevelopment expenses is primarily associated with an increase in non-cash equity-based compensation and other expense of $28.9 million.
Depreciation and amortization
Depreciation and amortization expense increased to $85.9 million for the year ended December 31, 2020 from $65.6 million for the year ended December 31, 2019, an increase of $20.3 million or 31%, mainly due to the drop-down of the Hamlet plant from our former sponsor and the acquisition and integration costs.of the production plant located in Waycross, Georgia.
Interest expense
We incurred $44.9$46.0 million of interest expense during the year ended December 31, 2020 and $39.3$42.0 million during the year ended December 31, 2019. The increase in interest expense from the prior year was primarily attributable to an increase in borrowings as a result of our acquisitions duringacquisition of the year ended December 31, 2020 compared to the year ended December 31, 2019.production plant located in Waycross, Georgia in July 2020.
Early retirement of debt obligation
In 2019, we redeemed all $355.0 million of aggregate principal amount of 2021 Notes and recognized a $9.0 million loss in early retirement of debt obligation consisting of a $7.5 million debt redemption premium and $1.5 million for the write-off of unamortized debt issuance costs, original issue discount and premium. The amounts were amortized over the term of the 2021 Notes and were expensed in December 2019 when we repaid $355.0 million of aggregate principal amount of the 2021 Notes.
Income Taxtax
We incurred $0.1$0.2 million of income tax expense during the year ended December 31, 2020 and incurred and income tax benefit of $1.9 million during the year ended December 31, 2019. The decrease in the income tax benefit of $2.1 million was primarily related to an entity acquired in the Georgia Biomass Acquisition.income taxes of a corporate subsidiary.
Adjusted net incomeloss
Year Ended December 31,
20202019Change
(Recast)(Recast)
(in thousands)
Reconciliation of net loss to adjusted net loss:
Net loss$(106,324)$(134,984)$28,660 
Acquisition and integration costs and other7,678 6,866 812 
Early retirement of debt obligation— 9,042 (9,042)
Commercial Services(4,139)4,139 (8,278)
Interest expense from incremental borrowings related to Chesapeake Incident and Hurricane Events2,211 1,705 506 
Adjusted net loss$(100,574)$(113,232)$12,658 
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Year Ended December 31,
20202019Change
(in thousands)
Reconciliation of net income (loss) to adjusted net income:
Net income (loss)$17,080 $(2,943)$20,023 
Acquisition and integration costs and other7,407 4,411 2,996 
MSA Fee Waivers23,400 22,600 800 
Interest expense from incremental borrowings related to Chesapeake Incident and Hurricane Events2,211 1,705 506 
Early retirement of debt obligation— 9,042 (9,042)
Commercial Services(4,139)4,139 (8,278)
Adjusted net income$45,959 $38,954 $7,005 
Adjusted EBITDA
Year Ended December 31,Change
20202019
(Recast)(Recast)
(in thousands)
Reconciliation of net loss to adjusted EBITDA:
Net loss$(106,324)$(134,984)$28,660 
Add:
Depreciation and amortization85,892 65,565 20,327 
Interest expense45,996 42,042 3,954 
Income tax expense (benefit)169 (1,954)2,123 
Early retirement of debt obligation— 9,042 (9,042)
Non-cash equity-based compensation and other expense39,528 10,631 28,897 
Loss on disposal of assets8,715 3,558 5,157 
Changes in unrealized derivative instruments4,328 4,588 (260)
Acquisition and integration costs and other7,678 6,866 812 
Commercial Services(4,139)4,139 (8,278)
Adjusted EBITDA$81,843 $9,493 $72,350 
We generated adjusted net incomeEBITDA of $46.0$81.8 million for the year ended December 31, 2020 compared to $39.0$9.5 million for the year ended December 31, 2019. The increase in net income and adjusted net income for the year ended December 31, 2020 was primarily attributable to the factors described below under the heading “Adjusted EBITDA,” offset by approximately $6.5 million of acquisition and integration costs and approximately $23.0 million of incremental depreciation, amortization and interest expenses mainly associated with the recent acquisitions, as well as changes in certain non-cash expenses.
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Adjusted EBITDA
 Year Ended December 31,
20202019Change
(in thousands)
Reconciliation of net income (loss) to adjusted EBITDA:
Net income (loss)$17,080 $(2,943)$20,023 
Add:
Depreciation and amortization77,471 51,581 25,890 
Interest expense44,902 39,344 5,558 
Early retirement of debt obligation— 9,042 (9,042)
Non-cash unit compensation expense12,798 5,410 7,388 
Income tax expense69 — 69 
Asset impairments and disposals6,978 3,103 3,875 
Changes in unrealized derivative instruments4,328 4,588 (260)
MSA Fee Waivers23,400 22,600 800 
Acquisition and integration costs and other7,407 4,411 2,996 
Commercial Services(4,139)4,139 (8,278)
Adjusted EBITDA$190,294 $141,275 $49,019 
We generated adjusted EBITDA of $190.3 million for the year ended December 31, 2020 compared to $141.3 million for the year ended December 31, 2019. The $49.0$72.4 million increase was primarily attributable to the factors described above under the heading “Adjusted gross margin and adjusted gross margin per metric ton.”
Distributable cash flow
The following is a reconciliation of adjusted EBITDA to distributable cash flow:
Year Ended December 31,
20202019Change
(in thousands)
Adjusted EBITDA$190,294 $141,275 $49,019 
Less:
Interest expense, net of amortization of debt issuance costs, debt premium, original issue discount, interest expense on the redemption of the 2021 Notes in 2019, and impact from incremental borrowings related to Chesapeake Incident and Hurricane Events40,786 35,893 4,893 
Maintenance capital expenditures7,952 6,922 1,030 
Distributable cash flow attributable to Enviva Partners, LP141,556 98,460 43,096 
Less: Distributable cash flow attributable to incentive distribution rights26,917 11,439 15,478 
Distributable cash flow attributable to Enviva Partners, LP limited partners$114,639 $87,021 $27,618 
Year Ended December 31,Change
20202019
(Recast)(Recast)
(in thousands)
Reconciliation of adjusted EBITDA to distributable cash flow attributable to Enviva
Adjusted EBITDA$81,843 $9,493 $72,350 
Less:
Interest expense, net of amortization of debt issuance costs, debt premium, original issue discount, and impact from incremental borrowings related to Chesapeake Incident and Hurricane Events41,206 37,193 4,013 
Maintenance capital expenditures7,952 6,922 1,030 
Distributable cash flow attributable to Enviva$32,685 $(34,622)$67,307 
Liquidity and Capital Resources
Overview
Our primary sources of liquidity include cash and cash equivalent balances, cash generated from operations, borrowingsavailability under our senior secured revolving credit commitmentsfacility and, from time to time, debt and equity offerings. Our primary liquidity requirementsneeds are to fund working capital, service our debt, maintain cash reserves, finance plant acquisitionsgreenfield construction projects, growth initiatives, and plant expansion projects, finance maintenance capital expenditures, and pay distributions.dividends. We believe cash on hand, cash generated from our operations and the availability of our senior secured revolving credit commitmentsfacility will be sufficient to meet our primary liquidity requirements. However, future capital expenditures, such as expenditures made in relation to acquisitions of plants or terminals, plant acquisitionsdevelopment and/or plant expansion projects, and other cash requirements could be higher than we currently expect as a result of various factors. For example, COVID-19 has disrupted debt and equity capital markets and could restrict our access to, or increase the cost of capital from,
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public financing activities. Additionally, our ability to generate sufficient cash from our operating activities depends on our future performance, which is subject to general economic, political, financial, competitive, and other factors beyond our control.
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Our liquidity as of December 31, 2021, which included cash on hand and availability under our $570.0 million senior secured revolving credit facility, was $116.6 million.
Cash DistributionsDividends
To the extent we have sufficient cash from our operations after establishment of cash reserves and payment of fees and expenses, weWe intend to pay cash dividends to holders of our common units cash distributionsstock of at least the minimum quarterly distribution of $0.4125$3.62 per common unit per quarter, which equatesstock for 2022.
The former owners of our former sponsor have agreed to approximately $16.5reinvest in our common stock all dividends from 9.0 million per quarter, or approximately $66.0of the 16.0 million per year, based on the number of common units outstanding asissued in connection with the Simplification Transaction for the dividends paid for the period beginning with the third quarter of February 15, 2021.2021 through the fourth quarter of 2024.
Capital Requirements
We operate in a capital-intensive industry, which requires significant investments to develop and construct new production and terminal facilities, and maintain and upgrade our existing capital.facilities. Our capital requirements primarily have consisted, and we anticipate will continue to consist, of the following:
Maintenance capital expenditures, which are cash expenditures incurred to maintain our long-term operating income or operating capacity. These expenditures typically include certain system integrity, compliance, and safety improvements; and
Growth capital expenditures, which are cash expenditures we expect will increase our operating income or operating capacity over the long term. Growth capital expenditures include acquisitions or construction of new capital assets or capital improvements such as additions to or improvements on our existing capital assets as well as projects intended to extend the useful life of assets.
The classification of capital expenditures as either maintenance or growth is made at the individual asset level during our budgeting process and as we approve, execute, and monitor our capital spending.
In 2021,We plan to invest $255.0 million to $275.0 million in capital expenditures in 2022. Of that amount, we completedexpect to invest (i) $210.0 million to $220.0 million primarily on the completion of the production plant under construction in Lucedale Mississippi and the terminal at the Port of Pascagoula, Mississippi, and the construction of the Mid-Atlantic Expansions. As of December 31, 2020, we have paid approximately $120.0 million and expect to pay approximately $10.0 million during 2021.
We expect to invest a total of $28.0Epes plant, (ii) $30.0 million to expand the Greenwood plant’s production capacity to 600,000 MTPY. We expect to complete the expansion, which is currently underway, by year-end 2021.
We have commenced a series of projects (the “Multi-Plant Expansions”) at our Sampson plant, Hamlet plant and Cottondale plant, subject to receiving the necessary permits. We expect to invest approximately $50.0$35.0 million to de-bottleneck manufacturing processes, eliminate certain costs and increase production capacity. We expect to completeprimarily on the Multi-Plant Expansions, by the end of 2022.
As part of the planned expansion projects or otherwise as part of our ordinary system improvements, we will continueand (iii) $15.0 million to invest in the purchase and installation of emissions control equipment, such as regenerative thermal oxidizers, cyclones and baghouses at our existing plants, where required for environmental compliance or as part of our environmental leadership strategy. The expenditure amounts mentioned above for the Mid-Atlantic Expansions, the Greenwood plant expansion and the Multi-Plant Expansions include the investment in emissions control equipment.
Our financing strategy is to fund acquisitions, drop-downs and major expansion projects with 50% equity and 50% debt.$20.0 million on maintenance capital expenditures.
Long-Term Debt
2026 Notes
On December 9 and December 12,In 2019, Enviva Partners, LP, with its wholly owned subsidiary Enviva Partners Finance Corp.,we issued $550.0$600.0 million and $50.0 million, respectively, of the 2026 Notes in private placements under Rule 144A and Regulation S of the Securities Act of 1933, as amended, for a total combined aggregate principal amount outstanding of $600.0 million maturing in 2026.Notes. We received gross proceeds of approximately $601.8 million from the offerings and net proceeds of approximately $595.8 million after deducting commissions and expenses. We used the net proceeds from the offerings to (1) redeem our existing $355.0 million principal amount of 8.5% senior unsecured 2021 Notes, including payment of the related redemption premium, (2) repay borrowings under our senior secured revolving credit facility, including payment of the related accrued interest and (3) for general partnership purposes. Interest payments are due semi-annually in arrears on January 15 and July 15 of each year, commencing July 15, 2020.
In July 2020, we issued an additional $150.0 million aggregate principal amount of the 2026 Notes at an offering price of 103.75% of the principal amount (the “Additional Notes”). We received net proceeds of approximately $153.6 million from the Additional Notes offering after deducting discounts and commissions. We used the net proceeds from the Additional Notes
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offering to fund a portion of the cash consideration for the Greenwood Drop-Down and Georgia Biomass Acquisition, to repay borrowings under our revolving credit facility and for general partnership purposes.
We may redeem all or a portion of the 2026 Notes at any time at the applicable redemption price, plus accrued and unpaid interest, if any (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date), and, in some cases, plus a make-whole premium.
We were in compliance with the covenants and restrictions associated with, and no events of default existed under, the indenture governing the 2026 Notes as of December 31, 2020. The 2026 Notes are guaranteed jointly and severally on a senior unsecured basis by our existing subsidiaries (excluding Enviva Partners Finance Corp.) that guarantee certain of our indebtedness and may be guaranteed by certain future restricted subsidiaries. For additional information on our senior secured credit facility,the 2026 Notes, see Item 8. Financial Statements and Supplemental Data, Note 14, Long-Term Debt and Finance Lease Obligations.
2021 Notes
On December 9, 2019, we redeemed all $355.0 million of aggregate principal amount of 6.5% senior unsecured notes due 2021 (the “2021 Notes”) and recognized a $9.0 million loss on the early retirement of debt obligation consisting of a $7.5 million debt redemption premium and $1.5 million for the write-off of unamortized debt issuance costs, original issue discount and premium. The amounts were amortized over the term of the 2021 Notes and were expensed in December 2019 when we repaid $355.0 million of aggregate principal amount of the 2021 Notes. The redemption of the 2021 Notes was funded from a portion of the net proceeds from the issuance of the 2026 Notes.
Senior Secured Revolving Credit Facility
We have a $350.0 millionIn April 2021, we amended our senior secured revolving credit facility that matures onto increase the revolving credit commitments from $350.0 million to $525.0 million, to extend the maturity from October 18, 2023.2023 to April 2026, to increase the letter of credit commitment from $50.0 million to $80.0 million, and to reduce the cost of borrowing by 25 basis points. In December 2021, we amended our senior secured revolving credit facility to increase the revolving credit commitments from $525.0 million to $570.0 million and to permit the issuance of commercial letters of credit.
Borrowings under the revolving credit commitments thereunderfacility bear interest, at our option, at either a Eurodollar rate or at a base rate, in each case, plus an applicable margin. The applicable margin will fluctuate between 1.75%1.50% per annum and 3.00%2.75% per annum, in
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the case of Eurodollar rate borrowings, or between 0.75%0.50% per annum and 2.00%1.75% per annum, in the case of base rate loans, in each case, based on our Total Leverage Ratio (as defined in our credit agreement) at such time, with 25 basis point increases or decreases for each 0.50 increase or decrease in our Total Leverage Ratio from 2.75:1:00 to 4.75:1:00.
We are required to pay a commitment fee on the daily unused amount under the revolving credit commitments at a rate between 0.25% and 0.50% per annum.
The credit agreement contains certain covenants, restrictions, and events of default. We are required to maintain (1) a maximum Total Leverage Ratio at or below 4.755.00 to 1.00 (or 5.005.25 to 1.00 during a Material Transaction PeriodPeriod) and (2) a minimum Interest Coverage Ratio (as defined in our credit agreement) of not less than 2.25 to 1.00.
As of December 31, 2020,2021, we were in compliance with all covenants and restrictions associated with, and no events of default existed under, the credit agreement governing our senior secured revolving credit facility. Our obligations under the senior secured revolving credit facility are guaranteed by certain of our subsidiaries and secured by liens on substantially all of our assets; however, the senior secured revolving credit facility is not guaranteed by the Hamlet JV or secured by liens on its assets. For additional information on our senior secured revolving credit facility, see Item 8. Financial Statements and Supplemental Data, Note 14, Long-Term Debt and Finance Lease Obligations.
Seller Note
In connection with the Greenwood Drop-Down, we becameWe are a party to, and a guarantor of, a promissory note (the “Seller Note”) with a remaining principal balance of $40.0 million, which was initially recorded at its carrying value of $36.9$37.5 million. The Seller Note matures in February 2023 and has an interest rate of 2.5% per annum. Principal and related interest payments are due annually through February 2022 and quarterly thereafter.
Shelf Registration - Equity Interests in the Partnership
We filed a shelf registration statement on Form S-3 with the SEC on June 21, 2019 to allow us, from time to time, in one or more offerings, to offer and sell (1) common units representing limited partner interests in Enviva Partners, LP and (2) preferred units representing equity interests in Enviva Partners, LP. The aggregate initial offering price of all securities sold by us under the effective shelf registration statement may not exceed $500.0 million.
On June 18, 2020, we entered into a Common Unit Purchase Agreement (the “Unit Purchase Agreement”) with certain investors to sell 6,153,846 common units in a private placement at a price of $32.50 per common unit for gross proceeds of
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$200.0 million (the “Private Placement”). We used the net proceeds of $190.8 million from the Private Placement to fund a portion of the consideration for each of the Greenwood Drop-Down and the Georgia Biomass Acquisition.
Pursuant to the Unit Purchase Agreement, we entered into a registration rights agreement (the “Registration Rights Agreement”) with the investors in connection with the closing of the Private Placement, pursuant to which we agreed to file and maintain a registration statement (the “Shelf Registration Statement”) with respect to the resale of the common units on the terms set forth therein. The Registration Rights Agreement also provides certain investors with customary piggyback registration rights. On July 10, 2020, we filed the Shelf Registration Statement and on July 20, 2020, the Shelf Registration Statement was declared effective.
At-the-Market Offering Program
Pursuant to an equity distribution agreement dated August 8, 2016, we may offer and sell common units from time to time through a group of managers, subject to the terms and conditions set forth in such agreement, of up to an aggregate sales amount of $100.0 million (the “ATM Program”).
We did not sell any units under the ATM Program during 2020. As of February 15, 2021, $88.4 million remained available for issuance under the ATM Program.
Cash Flows
The following table sets forth a summary of our net cash flows from operating, investing and financing activities for the years ended December 31, 20202021 and 2019:2020:
Year Ended December 31,Year Ended December 31,
2020201920212020
(in thousands)(in thousands)
Net cash provided by operating activitiesNet cash provided by operating activities$119,335 $53,860 Net cash provided by operating activities$33,390 $14,399 
Net cash used in investing activitiesNet cash used in investing activities(396,805)(177,483)Net cash used in investing activities(332,322)(383,969)
Net cash provided by financing activitiesNet cash provided by financing activities278,421 130,216 Net cash provided by financing activities249,775 406,521 
Net increase in cash, cash equivalents and restricted cash$951 $6,593 
Net (decrease) increase in cash, cash equivalents and restricted cashNet (decrease) increase in cash, cash equivalents and restricted cash$(49,157)$36,951 
Cash Provided by Operating Activities
Net cash provided by operating activities was $119.3$33.4 million and $53.9$14.4 million for the years ended December 31, 20202021 and 2019,2020, respectively. The $65.5$19.0 million increase in cash provided by operating activities during the year ended December 31, 20202021 compared to the year ended December 31, 20192020 was primarily due to thean increase in cash from changes in working capital of $47.4 million partially offset by a decrease in cash from net income.income (loss) adjusted for non-cash items of $28.4 million.
Cash Used in Investing Activities
Net cash used in investing activities was $396.8$332.3 million and $177.5$384.0 million for the years ended December 31, 20202021 and 2019,2020, respectively. The $219.3$51.6 million increasedecrease in cash used in investing activities during the year ended December 31, 20202021 compared to the year ended December 31, 20192020 was primarily due to a totalthe investment of net cash paid of $292.9$163.3 million in relation to the Greenwood Drop-Down andacquisition of the production plant located in Waycross, Georgia, Biomass Acquisition,last year offset by a $74.7 million cash paymentthe increase in relation to the Hamlet Drop-Down in the year ended December 31, 2019.capital expenditures of $111.3 million.
Cash Provided by Financing Activities
Net cash provided by financing activities was $278.4$249.8 million and $130.2$406.5 million for the years ended December 31, 20202021 and 2019,2020, respectively. The $148.2$156.7 million increasedecrease in net cash provided by financing activities in 2020,2021, as compared to 2019, is2020, was primarily attributable to an increase in cash used to acquire a netnon-controlling interest of $59.7 million, a reduction in cash from contributed capital to common control entities acquired of $105.0 million, and an increase in cash distribution of $107.1$44.8 million, partially offset by an increase in proceeds from debt issuancesthe issuance of common shares of $24.0 million and proceeds from debt issuance costs net of repayment of debt and a $93.7 million increase in net proceeds from common unit issuances offset by increases of $37.6 million in cash distributions and $15.6 million in deferred consideration for drop-down transactions.$19.3 million.
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Contractual Obligations
Contractual ObligationsTotal20212022-20232024-20252026 and
Beyond
(in thousands)
Long-term debt (1)$910,000 $2,500 $157,500 $— $750,000 
Finance leases (2)19,603 8,828 7,043 1,351 2,381 
Other long-term debt (3)2,000 2,000 — — — 
Operating leases (4)98,501 6,726 12,831 12,374 66,570 
Interest payments (5)261,602 54,086 105,652 97,653 4,211 
Purchase obligations (6)9,748 9,748 — — — 
Shipping commitments (7)1,381,991 117,875 230,582 214,475 819,059 
Other purchase commitments (8)524,763 142,383 232,514 124,855 25,011 
$3,208,208 $344,146 $746,122 $450,708 $1,667,232 
____________________________________________
(1)Long-term debt as of December 31, 2020 consisted of (1) $746.9 million of outstanding indebtedness, net of unamortized discount, premium and debt issuance of $3.1 million related to the 2026 Notes, (2) $120.0 million of borrowings under our senior secured credit facility and (3) $37.6 million of outstanding indebtedness, net of unamortized discount of $2.4 million, related to the Seller Note.
(2)Finance leases are related to machinery, equipment and other assets included in property, plant and equipment.
(3)Other long-term debt consists of a note payable held by Enviva Pellets Amory, LLC (“Amory”), a wholly owned subsidiary of the Partnership.
(4)Operating leases are related to real estate, machinery, equipment and other assets with an initial term of longer than 12 months.
(5)Cash obligations for interest expense reflect, as of December 31, 2020, interest payments related to (1) the 2026 Notes, (2) borrowings under our senior secured credit facility, (3) the Seller Note, (4) other long-term debt and (5) finance leases.
(6)At December 31, 2020, we had $9.7 million of purchase obligations, which consisted of commitments for the purchase of materials, supplies and the engagement of services for the operation of our facilities to be used in the normal course of business. The amounts presented in the table do not include items already recorded in accounts payable or accrued liabilities at December 31, 2020.
(7)In order to mitigate volatility in our shipping costs, we have entered into fixed-price shipping contracts with reputable shippers matching the terms and volumes of certain of our off‑take contracts for which we are responsible for arranging shipping. Our contracts with shippers include provisions as to the minimum amount of MTPY to be shipped and may also stipulate the number of shipments. Pursuant to these contracts, the terms of which extend to up to 15 years, charges are based on a fixed‑price per MT and, in most cases, there are adjustment provisions for increases in the price of fuel or for other distribution-related costs. The price per MT may also vary depending on the loading port and the discharge port. Our shippers commit their resources based on our planned shipments and we would likely be liable for a portion of their expenses if we deviated from our communicated plans. As of December 31, 2020, we estimate our obligations related to these shipping contracts to be approximately $1.4 billion through 2039. These amounts will be offset by the related sales transactions in the same period, which are not included in the table above.
(8)Purchase and other commitments consist primarily of commitments under certain wood fiber and wood pellet purchases, handling and terminal and stevedoring service contracts. Some of our suppliers and service providers commit resources based on our planned purchases and require minimum levels of commitments. The wood pellet supply agreements for the purchase of 1,080,000 MT of wood pellets from British Columbia are fully offset by an agreement to sell 1,080,000 MT of wood pellets to the same counterparty from our terminal locations. The amounts in the table represent an estimate of the costs we would incur under these contracts as of December 31, 2020. Many of our contracts are requirement contracts and currently do not represent a firm commitment to purchase from our suppliers; therefore, they are not reflected in the table above. Under these contracts, we may be liable for the costs incurred on services rendered until termination and the costs of any supplies on hand.
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Off‑Balance Sheet Arrangements
As of December 31, 2020,2021, we did not have any off‑balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S‑K, such as the use of unconsolidated subsidiaries, structured finance, special purpose entities or a variable interest in unconsolidated entities.
Recently Issued Accounting Pronouncements
See Part II, Item 8. “Financial Statements and Supplementary Data—Note 2, “Significant Accounting Policies—Recently Adopted Accounting Standards and Recently Issued Accounting Standards not yet Adopted,” in the Notes to our Consolidated Financial Statements included in this Annual Report on Form 10-K for a description of recently issued and adopted accounting pronouncements.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported revenues and expenses during the reporting periods. We evaluate these estimates and assumptions on an ongoing basis and base our estimates on historical experience, current conditions and various other assumptions that we believe to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. Our actual results may materially differ from these estimates.
For accounting policies and estimates that we believe are critical to our consolidated financial statements due to the degree of uncertainty regarding the estimates or assumptions involved, please see the following disclosures within the Notes to our Consolidated Financial Statements included in Part II, Item 8. of this Annual Report on Form 10-K: Note 2, Significant Accounting Policies, specifically about “Business Combinations”, “Inventories”, “Revenue Recognition”, “Cost of Goods Sold”, and “Property, Plant and Equipment”, and Note 4, “Acquisition”.
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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss arising from adverse changes in market rates and prices. Historically, our risks have been predominantly related to potential changes in the fair value of our long-term debt due to fluctuations in applicable market interest rates. Our market risk exposure is expected to be limited to risks that arise in the normal course of business, as we do not engage in speculative, non‑operating transactions, nor do we use financial instruments or derivative instruments for trading purposes.
Interest Rate Risk
At December 31, 2020,2021, our total debt had a carrying value of $906.4 million and fair value of $959.3 million.$1.3 billion.
Although we seek to mitigate a portion of our interest rate risk through interest rate swaps, we are exposed to fluctuations in interest rates on borrowings under our senior secured revolving credit facility. Borrowings under the senior secured revolving credit facility bear interest, at our option, at either a base rate plus an applicable margin or at a Eurodollar rate plus an applicable margin.
We enter into derivative instruments to manage cash flow. We do not enter into derivative instruments for speculative or trading purposes. During the year endedAs of December 31, 2020,2021, we had no interest rate swaps outstanding. Previously, we entered into pay-fixed, receive-variable interest rate swaps that expireexpired in September 2021 and October 2021 to hedge interest rate risk associated with variable rate borrowings under our senior secured revolving credit facility. The interest rate swaps are not designated and accounted for as cash flow hedges. The counterparty to our interest rate swap agreements are major financial institutions.
There can be no assurance that our interest rate risk-management practices, if any, will eliminate or substantially reduce risks associated with fluctuating interest rates. For more information, please read Part I, Item 1A “Risk Factors—Our exposure to risks associated with foreign currency and interest rate fluctuations, as well as the hedging arrangements we may enter into to mitigate those risks, could have an adverse effect on our financial condition and results of operations.”
Credit Risk
Substantially all of our revenue was from long-term, take-or-pay off-take contracts with fourfive customers for the years ended December 31, 2021, and 2020 2019 and 2018.four customers for the year ended December 31, 2019. During the year ended December 31, 2020,2021, most of our customers were major power generators in Europe. This concentration of counterparties operating in a single industry and geographic area results in an exposure to credit risk, in that the counterparties may be similarly affected by changes in economic, political, regulatory or other conditions. If a customer defaults or if any of our contracts expire in accordance with their terms, and we are unable to renew or replace these contracts, our gross margin and cash flows, andas well as our ability to make cash distributionsdividends to our unitholdersstockholders, may be adversely affected. Although we have entered into hedging arrangements in order to minimize our exposure to fluctuations in foreign currency exchange and interest rates, our derivatives also expose us to credit risk to the extent that counterparties may be unable to meet the terms of our hedging agreements. For more information, please read Part I, Item 1A “Risk Factors—Our exposure to risks associated with foreign currency and interest rate fluctuations, as well as the hedging arrangements we may enter into to mitigate those risks, could have an adverse effect on our financial condition and results of operations and — We will derive substantially all of our revenues from six customers in 2021,2022, five of which are located in Europe. If we fail to continue to diversify our customer base, our results of operations, business and financial position and ability to pay distributionsdividends to our unitholdersstockholders could be materially adversely affected.
Foreign Currency Exchange Risk
We primarily are exposed to fluctuations in foreign currency exchange rates related to contracts pursuant to which deliveries of wood pellets will be settled in foreign currency. We have entered into forward contracts and purchased options to hedge a portion of our forecasted revenue for these customer contracts.
As of December 31, 2020,2021, we had notional amounts of 143.657.5 million GBP and 13.011.0 million Euro (“EUR”) under foreign currency forward contracts and 51.67.3 million GBP under foreign currency option contracts that expire between 20212022 and 2024. As of December 31, 2020,2021, we had no EUR option contracts outstanding.
Historically, we designated and accounted for forward contracts and purchased options as cash flow hedges of anticipated foreign currency denominated revenue and, therefore, the effective portion of the changes in fair value on these instruments was recorded as a component of accumulated other comprehensive income in partners’ capitalequity and was reclassified to revenue in the consolidated statements of operations in the same period in which the underlying revenue transactions occurred. During the third quarter of 2018, we elected to discontinue hedge accounting for all designated foreign currency cash flow hedges and, as a
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result, we had no unrealized loss (gain) associated with foreign currency forward contracts and foreign currency purchased
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options in accumulated other comprehensive income. At December 31, 20202021 and 2019,2020, no unrealized amounts associated with foreign currency forward contracts and foreign currency purchased options were included in other comprehensive income.
We do not utilize foreign exchange contracts for speculative or trading purposes. The counterparties to our foreign exchange contracts are major financial institutions. There can be no assurance that our hedging arrangements or other foreign exchange rate risk-management practices, if any, will eliminate or substantially reduce risks associated with our exposure to fluctuating foreign exchange rates. For more information, please read Part I, Item 1A “Risk Factors—Our exposure to risks associated with foreign currency and interest rate fluctuations, as well as the hedging arrangements we may enter into to mitigate those risks, could have an adverse effect on our financial condition and results of operations.”
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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
ENVIVA PARTNERS, LPINC. AND SUBSIDIARIES
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Report of Independent Registered Public Accounting Firm

To the UnitholdersStockholders and the Board of Directors of Enviva Partners, LPInc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Enviva Partners, LPInc. and subsidiaries (the Partnership)Company) as of December 31, 20202021 and 2019,2020, the related consolidated statements of operations, comprehensive (loss) income,loss, changes in partners’ capitalequity and cash flows for each of the twothree years in the period ended December 31, 2020,2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the PartnershipCompany at December 31, 20202021 and 2019,2020, and the results of its operations and cash flows for each of the twothree years in the period ended December 31, 2020,2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020,2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 25, 2021March 4, 2022 expressed an unqualified opinion thereon.
Adoption of New Accounting Standards
As discussed in Note 2 to the consolidated financial statements, the Partnership changed its method of accounting for leases in 2019.
Basis for Opinion
These financial statements are the responsibility of the management of the Partnership’s General Partner.Company’s management. Our responsibility is to express an opinion on the Partnership’sCompany’s financial statements based on our audit.audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the PartnershipCompany in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our auditaudits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our auditaudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our auditaudits also included evaluating the accounting principles used and significant estimates made by the General Partner’s management, as well as evaluating the overall presentation of the financial statements. We believe that our audit providesaudits provide a reasonable basis for our opinion.
Critical Audit MattersMatter
The critical audit mattersmatter communicated below are mattersis a matter arising from the current period audit of the financial statements that werewas communicated or required to be communicated to the audit committee and that: (1) relaterelates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit mattersmatter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit mattersmatter below, providing a separate opinionsopinion on the critical audit mattersmatter or on the accounts or disclosures to which they relate.
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it relates.
Related Party Transactions
Description of the Matter

The Partnership engages, in the ordinary course of business, in related party transactions with Enviva Holdings LP, and certain of its subsidiaries. Each of these entities is a related party. As discussed in Note 3 and 15 to the consolidated financial statements, the Partnership has entered into a number of transactions with these related parties, including but not limited to agreements for operations, general administrative, management, and other services, as well as an acquisition of the Greenwood plant.
Especially challenging auditor judgment was involved in assessing the completeness and accuracy of related party transactions and assessing the sufficiency of the disclosures due to the complexity of the Partnership’s legal structure. Enviva Holdings, LP is involved in many aspects of the Partnership’s business, including expenses allocated and charged to the Partnership from Enviva Holdings, LP for services provided under the Management Service Agreements.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over related party transactions. For example, we tested controls over management’s identification of related parties, review of the related party transactions listing for completeness, and review for completeness and accuracy of the related party disclosures.
Our audit procedures included, among others, reading public filings and external news for information related to transactions between the Partnership and related parties. In addition, we inspected the Partnership’s minutes from meetings of the Board of Directors and related Committees. We inspected the Partnership’s organization chart throughout the year to obtain an understanding of the legal structure and confirmed our understanding based on inquiries with legal counsel. We also inspected the Partnership’s directors and officers questionnaires, and read material agreements between the Partnership and related parties. We tested all material transactions between related parties based on our review of the related agreements in order to identify the appropriate classification. We inquired with executive officers, key members of management, and the Audit Committee of the Board of Directors regarding related party transactions to understand the nature of the relationship and the business purpose of the transaction. Additionally, we assessed the adequacy and completeness of the Partnerships’ related party disclosures.
Completeness of Revenue from Off-Take Contracts
Description of the Matter
As discussed in Note 1 to the consolidated financial statements, the PartnershipCompany primarily earns revenue through long-term take-or-pay contracts that include a defined volume of wood pellets that the customer is required to purchase on an annual basis. Revenue on these contracts is recognized when control transfers to the customer at the time of loading wood pellets onto a ship.
Auditing the measurement of revenue at year-end required especially challenging auditor judgment and more extensive audit procedures, including the use of specialists, due to the complexity of determining the quantity of wood pellets transferred to the customer at the end of the year.
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How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over revenue cut-off for off-take contracts. For example, we tested controls over management’s review of third-party survey results at year-end, and managements rollforward of pellets.
Our audit procedures included, among others, evaluating the work of management’s third-party specialist to survey all partially loaded ships at year end to assist in determining the amount of pellets transferred to customers at the end of year. We also performed observations of finished goods held by the Company at or near year-end, and tested management’s rollforward of pellets. We also performed analytical procedures over year-end revenue cut off, made inquiries of employees outside of the accounting department to corroborate the completeness of the vessels being loaded at year-end and inspected a sample of shipping and receiving documentation to test that pellets shipped near year-end were recognized in the appropriate period based on the date of shipment.
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We have served as the Company’s auditor since 2019.

Valuation of acquired intangible assets and liabilities
Description of the MatterDuring 2020, the Partnership completed its business combination of Georgia Biomass Holding LLC for $163 million, as disclosed in Note 4 to the consolidated financial statements. As part of the transaction, the Partnership acquired certain off-take contracts and a shipping contract which were recognized at fair value as intangible assets and liabilities of $5.7 million and $7.4 million, respectively.
How We Addressed the Matter in Our Audit
Auditing the Partnership's determination of fair value for the intangible assets and liabilities was especially complex due to the significant estimation uncertainty in the Partnership’s determination of the fair value of the identified intangible assets and liabilities. The significant estimation uncertainty was primarily due to the limited market data related to the market value of the acquired contracts, due to the limited pricing sources available for comparable utility-grade wood pellets and shipping agreements. The Partnership used an income method to measure the intangible assets and liabilities. The significant assumption used to estimate the fair value of the intangible assets and liabilities is the market rate for similar contracts.
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the valuation of acquired contracts. For example, we tested controls over the estimation process supporting the recognition and measurement of the contract assets and liabilities. We also tested management’s review controls over the significant assumption used in the valuation models.
To test the estimated fair value of the intangible assets and liabilities, we performed audit procedures that included, among others, evaluating the Partnership's selection of the valuation methodology, evaluating the methods and significant assumption used by the Partnership’s valuation specialist, and evaluating the completeness and accuracy of the underlying data supporting the significant assumption and estimates. For example, we compared the significant assumption to current industry, market trends, and other recently negotiated contracts. We involved our valuation specialists to assist with our evaluation of the methodology used by the Partnership and to perform a sensitivity analysis over the significant assumption.


/s/ Ernst & Young LLP
We have served as the Partnership’s auditor since 2019.
Tysons, Virginia
February 25, 2021March 4, 2022
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Report of Independent Registered Public Accounting Firm
To Unitholders and Board of Directors
Enviva Partners, LP:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of income, comprehensive income, changes in partners’ capital, and cash flows of Enviva Partners, LP and subsidiaries (the Partnership) for the year ended December 31, 2018, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the Partnership’s results of operations and cash flows for the year ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
(signed) KPMG LLP
We served as the Company’s auditor from 2010 to 2019.
McLean, Virginia
March 1, 2019
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ENVIVA PARTNERS, LPINC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 20202021 and 20192020
(In thousands, except number of units)units or shares)
2020
202020192021(Recast)
AssetsAssetsAssets
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$10,004 $9,053 Cash and cash equivalents$16,801 $66,114 
Restricted cashRestricted cash1,717 1,561 
Accounts receivableAccounts receivable124,212 72,421 Accounts receivable97,439 124,212 
Related-party receivables, net2,414 
Other accounts receivableOther accounts receivable17,826 15,112 
InventoriesInventories42,364 32,998 Inventories57,717 45,224 
Prepaid expenses and other current assetsPrepaid expenses and other current assets16,457 5,617 Prepaid expenses and other current assets7,230 6,820 
Total current assetsTotal current assets195,451 120,089 Total current assets198,730 259,043 
Property, plant and equipment, netProperty, plant and equipment, net1,071,819 751,780 Property, plant and equipment, net1,498,197 1,242,421 
Operating lease right-of-use assetsOperating lease right-of-use assets51,434 32,830 Operating lease right-of-use assets108,846 111,927 
GoodwillGoodwill99,660 85,615 Goodwill103,928 99,660 
Other long-term assetsOther long-term assets11,248 4,504 Other long-term assets14,446 12,943 
Total assetsTotal assets$1,429,612 $994,818 Total assets$1,924,147 $1,725,994 
Liabilities and Partners’ Capital
Liabilities and EquityLiabilities and Equity
Current liabilities:Current liabilities:Current liabilities:
Accounts payableAccounts payable$15,208 $18,985 Accounts payable$29,535 $22,398 
Related-party payables, net304 
Deferred consideration for drop-downs due to related-party40,000 
Accrued and other current liabilitiesAccrued and other current liabilities108,976 59,066 Accrued and other current liabilities163,306 147,815 
Current portion of interest payableCurrent portion of interest payable24,642 3,427 Current portion of interest payable25,060 24,656 
Current portion of long-term debt and finance lease obligationsCurrent portion of long-term debt and finance lease obligations13,328 6,590 Current portion of long-term debt and finance lease obligations39,105 14,551 
Related-party note payableRelated-party note payable— 20,000 
Deferred revenueDeferred revenue— 4,855 
Total current liabilitiesTotal current liabilities162,154 128,372 Total current liabilities257,006 234,275 
Long-term debt and finance lease obligationsLong-term debt and finance lease obligations912,721 596,430 Long-term debt and finance lease obligations1,232,441 913,498 
Long-term operating lease liabilitiesLong-term operating lease liabilities50,074 33,469 Long-term operating lease liabilities122,252 111,991 
Deferred tax liabilities, netDeferred tax liabilities, net13,217 Deferred tax liabilities, net36 25,218 
Other long-term liabilitiesOther long-term liabilities15,419 3,971 Other long-term liabilities41,748 31,352 
Total liabilitiesTotal liabilities1,153,585 762,242 Total liabilities1,653,483 1,316,334 
Commitments and contingenciesCommitments and contingencies00Commitments and contingencies00
Partners’ capital:
Limited partners:
Common unitholders—public (26,209,862 and 19,870,436 units issued and outstanding at December 31, 2020 and 2019, respectively)424,825 300,184 
Common unitholder—sponsor (13,586,375 units issued and outstanding at December 31, 2020 and 2019)41,816 82,300 
General partner (0 outstanding units)(142,404)(101,739)
Accumulated other comprehensive (loss) income(18)23 
Total Enviva Partners, LP partners’ capital324,219 280,768 
Noncontrolling interest(48,192)(48,192)
Total partners' capital276,027 232,576 
Total liabilities and partners’ capital$1,429,612 $994,818 
Equity:Equity:
Series A (785.0 million outstanding with liquidation preference of $812.9 million at December 31, 2020)Series A (785.0 million outstanding with liquidation preference of $812.9 million at December 31, 2020)$— $(92,703)
Series B (2,500 units outstanding at December 31, 2020)Series B (2,500 units outstanding at December 31, 2020)— 13,865 
Preferred stock, $0.001 par value, 100,000,000 shares authorized, none issued and outstanding at December 31, 2021.Preferred stock, $0.001 par value, 100,000,000 shares authorized, none issued and outstanding at December 31, 2021.— — 
Common stock, $0.001 par value, 600,000,000 shares authorized, 61,137,744 issued and outstanding at December 31, 2021.Common stock, $0.001 par value, 600,000,000 shares authorized, 61,137,744 issued and outstanding at December 31, 2021.61 — 
Additional paid-in capitalAdditional paid-in capital317,998 — 
Retained earningsRetained earnings— — 
Accumulated other comprehensive incomeAccumulated other comprehensive income299 — 
Total Enviva Inc.'s equityTotal Enviva Inc.'s equity318,358 (78,838)
Noncontrolling interestsNoncontrolling interests(47,694)488,498 
Total equityTotal equity270,664 409,660 
Total liabilities and equityTotal liabilities and equity$1,924,147 $1,725,994 
See accompanying notes to consolidated financial statements.
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ENVIVA PARTNERS, LPINC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31, 2021, 2020 2019 and 20182019
(In thousands, except per unitunits or share amounts)
20202019
2021(Recast)(Recast)
Product sales$999,190 $830,528 $674,251 
Other revenue42,488 44,434 9,317 
Net revenue1,041,678 874,962 683,568 
Operating costs and expenses:
Cost of goods sold, excluding items below861,703 711,248 601,869 
Loss on disposal of assets10,153 8,715 3,558 
Selling, general, administrative, and development expenses(1)
175,108 129,537 98,818 
Depreciation and amortization91,966 85,892 65,565 
Total operating costs and expenses1,138,930 935,392 769,810 
Loss from operations(97,252)(60,430)(86,242)
Other (expense) income:
Interest expense(56,497)(45,996)(42,042)
Early retirement of debt obligation(9,377)— (9,042)
Other income, net880 271 410 
Total other expense, net(64,994)(45,725)(50,674)
Net loss before income tax (benefit) expense(162,246)(106,155)(136,916)
Income tax (benefit) expense(16,975)169 (1,932)
Net loss(145,271)(106,324)(134,984)
Less net loss attributable to noncontrolling interests23,202 20,034 53,480 
Net loss attributable to Enviva Inc.$(122,069)$(86,290)$(81,504)
Net loss per Enviva Inc. unit:(2)
Basic and diluted$(4.76)$(5.39)$(5.09)
Weighted-average number of units outstanding:
Basic and diluted25,632 16,000 16,000 
(1)
202020192018
Product sales$830,528 $674,251 $564,010 
Other revenue (1)
44,551 10,142 9,731 
Net revenue875,079 684,393 573,741 
Cost of goods sold (1)
684,863 549,701 461,735 
Loss on disposal of assets6,978 3,103 2,386 
Depreciation and amortization76,115 50,521 40,179 
Total cost of goods sold767,956 603,325 504,300 
Gross margin107,123 81,068 69,441 
General and administrative expenses12,800 6,932 5,879 
Related-party management services agreement fee32,545 29,457 21,762 
Total general and administrative expenses45,345 36,389 27,641 
Income from operations61,778 44,679 41,800 
Other (expense) income:
Interest expense(44,902)(39,344)(36,471)
Early retirement of debt obligation(9,042)(751)
Other income, net273 764 2,374 
Total other expense, net(44,629)(47,622)(34,848)
Net income (loss) before income tax expense17,149 (2,943)6,952 
Income tax expense69 
Net income (loss)$17,080 $(2,943)$6,952 
Net (loss) income per limited partner common unit:
Basic and diluted$(0.36)$(0.54)$0.04 
Net income per limited partner subordinated unit:
Basic and diluted$$$0.04 
Weighted-average number of limited partner units outstanding:
Common—basic36,813 31,791 21,533 
Common—diluted36,813 31,791 22,553 
Subordinated—basic and diluted4,893 
Distributions declared per limited partner unit$3.0000 $2.6500 $2.5300 
(1) See Note 15, Related-Party Transactions
See Note 15, Related-Party Transactions.
(2) Effective December 31, 2021, units were converted into shares due to the conversion from a partnership to a corporation.
See accompanying notes to consolidated financial statements.
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ENVIVA PARTNERS, LPINC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)Loss
Years ended December 31, 2021, 2020 2019 and 20182019
(In thousands)
202020192018
Net income (loss)$17,080 $(2,943)$6,952 
Other comprehensive income (loss), net of tax of $0:
Net unrealized (losses) gains on cash flow hedges(146)5,655 
Reclassification of net gains on cash flow hedges realized into net income (loss)(22)(288)(2,178)
Currency translation adjustment(19)
Total other comprehensive (loss) income(41)(434)3,479 
Total comprehensive income (loss)$17,039 $(3,377)$10,431 
20202019
2021(Recast)(Recast)
Net loss$(145,271)$(106,324)$(134,984)
Other comprehensive income (loss), net of tax of $0:
Reclassification of net gains on cash flow hedges realized into net loss— (22)(288)
Currency translation adjustment37 98 31 
Net unrealized losses on cash flow hedges— — (146)
Total other comprehensive income (loss)37 76 (403)
Total comprehensive loss(145,234)(106,248)(135,387)
Less comprehensive loss attributable to noncontrolling interests23,202 20,034 53,480 
Comprehensive loss attributable to Enviva Inc.$(122,032)$(86,214)$(81,907)
See accompanying notes to consolidated financial statements.
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ENVIVA PARTNERS, LPINC. AND SUBSIDIARIES
Consolidated Statements of Changes in Partners’ CapitalEquity
Year ended December 31, 2021
(In thousands, except Series B Units)
Series ASeries BCommon
Units
Common
Shares
Additional Paid-In CapitalRetained EarningsAccumulated
Other
Comprehensive
Income
Equity Attributable to Enviva Inc.
Non-controlling
Interests 
Total Equity
UnitsAmountUnitsAmountUnitsAmountSharesAmount
Equity, December 31, 2020784,980 $(92,703)2,500 $13,865 — $— — $— $— $— $— $(78,838)$488,498 $409,660 
Acquisition of noncontrolling interest— (45,388)— — — — — — — — — (45,388)(108,031)(153,419)
Issuance of Enviva Partners, LP common units prior to the Simplification Transaction, net— — — — — — — — — — — — 214,510 214,510 
Cash distributions prior to the Simplification Transaction— — — — — — — — — — — — (71,471)(71,471)
Non-cash equity-based compensation and other expense prior to the Simplification Transaction— — 6,900 23,833 — — — — — — — 23,833 5,191 29,024 
Contribution of assets— — — — — — — — — — — — 389 389 
Other comprehensive income prior to the Simplification Transaction— 12 — — — — — — — — — 12 11 23 
Net loss prior to the Simplification Transaction— (102,284)— — — — — — — — — (102,284)(23,229)(125,513)
Simplification Transaction(784,980)240,363 (9,400)(37,698)16,000 350,924 — — — — — 553,589 (553,589)— 
Distributions after the Simplification Transaction— — — — — (52,145)— — — — — (52,145)— (52,145)
Common units issued in lieu of distributions— — — — 115 7,560 — — — — — 7,560 — 7,560 
Non-cash equity-based compensation and other expense after the Simplification Transaction— — — — 12,813 — — — — — 12,813 — 12,813 
Support Payments— — — — — 15,446 — — — — — 15,446 — 15,446 
Other comprehensive income after the Simplification Transaction— — — — — 14 — — — — — 14 — 14 
Net loss after the Simplification Transaction— — — — — (19,785)— — — — — (19,785)27 (19,758)
C-Corporation Conversion— — — — (16,121)(314,827)61,138 61 317,998 — 299 3,531 — 3,531 
Equity, December 31, 2021— $— — $— — $— 61,138 $61 $317,998 $— $299 $318,358 $(47,694)$270,664 
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ENVIVA INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity (Continued)
Years ended December 31, 2020 2019 and 20182019
(In thousands)thousands, except Series B Units)
Previous Units Existing until the Recapitalization of Enviva Inc.(1)
Current Units Created by the Recapitalization(1)
Series ASeries BSeries CSeries DSeries ESeries ASeries B
UnitsAmountUnitsAmountUnitsAmountUnitsAmountUnitsAmountUnitsAmountUnitsAmountEquity Attributable to Enviva Inc.Noncontrolling InterestsTotal Equity
Equity, December 31, 2018250,000 $128,179 14,063 $(2,228)6,045 $1,200 113,172 $10,276 1,115 $386 — — — — $137,813 $295,555 $433,368 
Issuance of Enviva Partners, LP common units through Enviva Partners, LP Long Term Incentive Plan— — — — — — — — — — — — — — — 583 583 
Issuance of Enviva Partners, LP common units, net— — — — — — — — — — — — — — — 146,278 146,278 
Cash distributions— — — — — — — (20)— — — — — — (20)(74,706)(74,726)
Enviva Partners, LP unit-based compensation— — — — — — — — — — — — — — — 4,340 4,340 
Enviva Partners, LP common units distributed to noncontrolling interest— — — — — — — — — — — — — — — (49,700)(49,700)
Contributed capital— — — — — — — — — — — — — — — 32,500 32,500 
Other comprehensive loss— (134)— (8)— — — (60)— — — — — — (202)(201)(403)
Net loss— (54,014)— (3,038)— — — (24,452)— — — — — — (81,504)(53,480)(134,984)
Equity, December 31, 2019250,000 $74,031 14,063 $(5,274)6,045 $1,200 113,172 $(14,256)1,115 $386 — — — — $56,087 $301,169 $357,256 
Acquisition of noncontrolling interest in Greenwood— (41,445)— (2,331)— — — (18,762)— — — — — — (62,538)(31,121)(93,659)
Other comprehensive income prior to recapitalization— 18 — — — — — — — — — — 28 — 28 
Net loss prior to recapitalization— (32,597)— (1,834)— — — (14,756)— — — — — — (49,187)— (49,187)
Recapitalization of Enviva Inc.(250,000)(7)(14,063)9,438 (6,045)(1,200)(113,172)47,765 (1,115)(386)784,980 (55,610)— — — — — 
Issuance of Enviva Partners, LP common units, net— — — — — — — — — — — — — — — 190,529 190,529 
Cash distributions— — — — — — — — — — — — — — — (74,169)(74,169)
Enviva Partners, LP unit-based compensation— — — — — — — — — — — — — — — 21,311 21,311 
Enviva Inc. unit-based compensation— — — — — — — — — — — — 2,500 13,865 13,865 — 13,865 
Contributed capital— — — — — — — — — — — — — — — 100,775 100,775 
Other comprehensive income— — — — — — — — — — — 10 — — 10 38 48 
Net loss— — — — — — — — — — — (37,103)— — (37,103)(20,034)(57,137)
Equity, December 31, 2020— $— — $— — $— — $— — $— 784,980 $(92,703)2,500 $13,865 $(78,838)$488,498 $409,660 

(1)
Limited Partners’ Capital
General
Partner
Interest 
Common
Units—
Public
Common
Units—
Sponsor
Subordinated
Units—
Sponsor
Accumulated
Other
Comprehensive
Income (loss)
Non-
controlling
Interests 
Total
Partners
Capital 
UnitsAmountUnitsAmountUnitsAmount
Partners’ capital, December 31, 2017$(128,569)13,073 $224,027 1,347 $16,050 11,905 $101,901 $(3,040)$$210,369 
Distributions to unitholders, distribution equivalent and incentive distribution rights(5,326)— (38,241)— (15,845)— (14,822)— — (74,234)
Issuance of units through Long-Term Incentive Plan(5,675)227 511 (82)(1,301)— — — — (6,465)
Issuance of common units, net— 241 — — — — — — 241 
Sale of common units— 1,265 13,335 (1,265)(13,335)— — — — — 
Conversion of subordinated units to common units— — — 11,905 78,504 (11,905)(78,504)— — — 
Non-cash Management Services Agreement expenses557 — 5,817 — — — — — — 6,374 
Other comprehensive income— — — — — — — 3,479 — 3,479 
Net income (loss)5,326 — 1,922 — 8,279 — (8,575)— — 6,952 
Partners’ capital, December 31, 2018(133,687)14,573 207,612 11,905 72,352 439 146,716 
Excess consideration over Enviva Wilmington Holdings, LLC net assets and initial recognition of its noncontrolling interest5,422 — — — — — — — (48,192)(42,770)
Distributions to unitholders, distribution equivalent and incentive distribution rights(9,821)— (51,906)— (34,452)— — — — (96,179)
Issuance of units through Long-Term Incentive Plan(1,882)97 72 — — — — — — (1,810)
Issuance of common units, net— 5,200 146,278 — — — — — — 146,278 
Issuance of units associated with the Hamlet Drop-Down— — — 1,681 50,000 — — — — 50,000 
Non-cash Management Services Agreement expenses23,687 — 5,310 — — — — — — 28,997 
Reimbursable amounts under Make-Whole Agreement4,721 — — — — — — — — 4,721 
Cumulative effect of accounting change - derivative instruments— — (10)— (8)— — 18 — — 
Other comprehensive loss— — — — — — — (434)— (434)
Net income (loss)9,821 — (7,172)— (5,592)— — — — (2,943)
Partners' capital, December 31, 2019(101,739)19,870 300,184 13,586 82,300 23 (48,192)232,576 
Excess consideration over Enviva Pellets Greenwood Holdings II, LLC net assets(61,830)— — — — — — — — (61,830)
Distributions to unitholders, distribution equivalent and incentive distribution rights(22,092)— (74,252)— (39,334)— — — — (135,678)
Issuance of units through Long-Term Incentive Plan(4,374)186 (572)— — — — — — (4,946)
Issuance of common units, net— 6,154 190,529 — — — — — — 190,529 
Non-cash Management Services Agreement expenses25,539 — 12,798 — — — — — — 38,337 
Other comprehensive loss— — — — — — — (41)— (41)
Net income (loss)22,092 — (3,862)— (1,150)— — — — 17,080 
Partners’ capital, December 31, 2020$(142,404)26,210 $424,825 13,586 $41,816 $$(18)$(48,192)$276,027 
See Note 17, Equity

See accompanying notes to consolidated financial statements.
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Consolidated Statements of Cash Flows
Years ended December 31, 2021, 2020 2019 and 20182019
(In thousands)
20202019
2020201920182021(Recast)(Recast)
Cash flows from operating activities:Cash flows from operating activities:   Cash flows from operating activities:   
Net income (loss)$17,080 $(2,943)$6,952 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net lossNet loss$(145,271)$(106,324)$(134,984)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortizationDepreciation and amortization77,471 51,581 40,745 Depreciation and amortization92,919 82,436 65,565 
MSA Fee Waivers23,400 22,600 
Amortization of debt issuance costs, debt premium and original issue discountsAmortization of debt issuance costs, debt premium and original issue discounts1,905 1,243 1,093 Amortization of debt issuance costs, debt premium and original issue discounts764 2,506 2,138 
Early retirement of debt obligationEarly retirement of debt obligation9,042 751 Early retirement of debt obligation9,377 — 9,042 
Loss on disposal of assetsLoss on disposal of assets6,978 3,103 2,386 Loss on disposal of assets10,153 8,715 3,558 
Unit-based compensation12,848 5,410 6,229 
De-designation of foreign currency forwards and options(1,947)
Deferred taxesDeferred taxes(21,629)336 (1,997)
Non-cash equity-based compensation and other expenseNon-cash equity-based compensation and other expense55,924 39,528 7,963 
Fair value changes in derivativesFair value changes in derivatives5,294 3,701 (7,464)Fair value changes in derivatives1,829 5,294 3,701 
Unrealized gains on foreign currency transactions, net54 177 23 
Unrealized loss on foreign currency transactions, netUnrealized loss on foreign currency transactions, net22 10 215 
Change in operating assets and liabilities:Change in operating assets and liabilities:Change in operating assets and liabilities:
Accounts and insurance receivables(60,235)(16,330)19,230 
Related-party receivables2,722 1,392 2,720 
Accounts and other receivablesAccounts and other receivables24,088 (60,276)(16,569)
Prepaid expenses and other current and long-term assetsPrepaid expenses and other current and long-term assets(13,819)(358)(182)Prepaid expenses and other current and long-term assets1,723 (12,892)(1,622)
InventoriesInventories825 (1,889)(7,843)Inventories(15,398)(1,903)(4,735)
DerivativesDerivatives(249)1,770 4,907 Derivatives(5,792)(249)1,770 
Accounts payable, accrued liabilities and other current liabilities35,189 9,287 14,916 
Related-party payables and accrued liabilities(27,933)173 
Accounts payable, accrued liabilities, and other current liabilitiesAccounts payable, accrued liabilities, and other current liabilities50,797 62,080 11,190 
Related-party payablesRelated-party payables(440)464 (531)
Deferred revenueDeferred revenue780 3,887 Deferred revenue(4,324)(4,139)3,887 
Accrued interestAccrued interest15,343 (5,148)367 Accrued interest(11,241)8,630 (5,209)
Operating lease liabilitiesOperating lease liabilities(5,828)(4,826)Operating lease liabilities(7,509)(10,912)(8,464)
Other long-term liabilitiesOther long-term liabilities(423)94 997 Other long-term liabilities(2,602)1,095 9,729 
Net cash provided by operating activities119,335 53,860 84,053 
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities33,390 14,399 (55,353)
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Purchases of property, plant and equipmentPurchases of property, plant and equipment(100,106)(111,269)(27,132)Purchases of property, plant and equipment(332,322)(220,998)(145,200)
Payments in relation to the Greenwood Drop-Down, net of cash acquired(129,631)
Payments in relation to the Georgia Biomass Acquisition, net of cash acquiredPayments in relation to the Georgia Biomass Acquisition, net of cash acquired(163,299)Payments in relation to the Georgia Biomass Acquisition, net of cash acquired— (163,299)— 
Payment in relation to the Hamlet Drop-Down(74,700)
Insurance proceeds from property loss1,130 
OtherOther(3,769)8,486 Other— 328 — 
Net cash used in investing activitiesNet cash used in investing activities(396,805)(177,483)(26,002)Net cash used in investing activities(332,322)(383,969)(145,200)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Proceeds from senior secured revolving credit facilityProceeds from senior secured revolving credit facility755,500 453,000 299,250 Proceeds from senior secured revolving credit facility1,025,000 755,500 453,000 
Principal payments on senior secured revolving credit facilityPrincipal payments on senior secured revolving credit facility(635,500)(526,000)(226,250)Principal payments on senior secured revolving credit facility(679,000)(635,500)(526,000)
Principal payments on Green Term LoanPrincipal payments on Green Term Loan(325,000)— — 
Proceeds from debt issuanceProceeds from debt issuance155,625 601,777 Proceeds from debt issuance321,750 155,625 601,777 
Support paymentsSupport payments15,446 — — 
Principal payments on other long-term debt and finance lease obligationsPrincipal payments on other long-term debt and finance lease obligations(5,571)(358,311)(46,466)Principal payments on other long-term debt and finance lease obligations(13,188)(10,951)(361,879)
Cash paid related to debt issuance costs and deferred offering costsCash paid related to debt issuance costs and deferred offering costs(3,949)(7,560)(2,495)Cash paid related to debt issuance costs and deferred offering costs(9,401)(3,858)(7,560)
Proceeds from common unit issuances, net190,529 96,822 241 
Payment of deferred consideration for Wilmington Drop-Down(24,300)
Distributions to unitholders, distribution equivalent rights and incentive distribution rights holder(133,217)(95,659)(73,518)
Payment to General Partner to purchase affiliate common units for Long-Term Incentive Plan vesting(2,341)
Proceeds from issuance of Enviva Inc. common sharesProceeds from issuance of Enviva Inc. common shares214,501 190,529 96,822 
Payments for acquisition of noncontrolling interest in Development JVPayments for acquisition of noncontrolling interest in Development JV(153,348)— — 
Payment for acquisition of noncontrolling interest in Greenwood and other projectsPayment for acquisition of noncontrolling interest in Greenwood and other projects— (93,659)— 
Principal payments on related-party note payablePrincipal payments on related-party note payable(20,000)— — 
Proceeds from related-party note payableProceeds from related-party note payable— 20,000 — 
Contributed capital to common control entities acquiredContributed capital to common control entities acquired— 105,000 32,500 
Cash distributionsCash distributions(116,006)(71,169)(74,732)
Payment for withholding tax associated with Long-Term Incentive Plan vestingPayment for withholding tax associated with Long-Term Incentive Plan vesting(4,996)(1,910)(4,536)Payment for withholding tax associated with Long-Term Incentive Plan vesting(10,979)(4,996)(1,910)
Payments in relation to the Hamlet Drop-Down(40,000)(99)
Cash paid for redemption premium from early retirement of debtCash paid for redemption premium from early retirement of debt(7,544)Cash paid for redemption premium from early retirement of debt— — (7,544)
Net cash provided by (used in) financing activities278,421 130,216 (56,115)
Net increase in cash, cash equivalents and restricted cash951 6,593 1,936 
Net cash provided by financing activitiesNet cash provided by financing activities249,775 406,521 204,474 
Net (decrease) increase in cash, cash equivalents and restricted cashNet (decrease) increase in cash, cash equivalents and restricted cash(49,157)36,951 3,921 
Cash, cash equivalents and restricted cash, beginning of periodCash, cash equivalents and restricted cash, beginning of period9,053 2,460 524 Cash, cash equivalents and restricted cash, beginning of period67,675 30,724 26,803 
Cash, cash equivalents and restricted cash, end of periodCash, cash equivalents and restricted cash, end of period$10,004 $9,053 $2,460 Cash, cash equivalents and restricted cash, end of period$18,518 $67,675 $30,724 

See accompanying notes to consolidated financial statements.
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Consolidated Statements of Cash Flows (Continued)
Years ended December 31, 2021, 2020 2019 and 20182019
(In thousands)
202020192018
Non-cash investing and financing activities:
Common unit issuance for deferred consideration for Wilmington Drop-Down$$49,700 $
Common unit issuance for the Hamlet Drop-Down50,000 
Property, plant and equipment acquired included in accounts payable and accrued liabilities16,197 3,421 8,939 
Property, plant and equipment acquired under finance leases12,487 6,493 3,512 
Deferred consideration to sponsor included in related-party payable40,000 
Conversion of subordinated units to common units78,504 
Transfer of Enviva Port of Wilmington, LLC Drop-Down consideration to short-term74,000 
Supplemental information:
Interest paid, net of capitalized interest$22,150 $41,190 $35,222 
20202019
2021(Recast)(Recast)
Non-cash investing and financing activities:
Property, plant, and equipment acquired included in accounts payable and accrued liabilities$20,105 $28,231 $13,603 
Enviva Partners, LP common units distributed to noncontrolling interest— — (49,700)
Supplemental information:
Interest paid, net of capitalized interest$14,884 $28,351 $41,190 
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Notes to Consolidated Financial Statements
(In thousands, except number of units, per unit amounts and unless otherwise noted)


(1) Description of Business and Basis of Presentation
Enviva Partners, LP (together with its subsidiaries, “we,” “us,” “our,” or the(the “Partnership”) isconverted from a Delaware limited partnership to a Delaware corporation (the “Conversion”) named “Enviva Inc.” effective December 31, 2021. The Partnership was formed on November 12, 2013 as a wholly owned subsidiary of Enviva Holdings, LP (together with its wholly owned subsidiaries Enviva MLP Holdco, LLC and Enviva Development Holdings, LLC, where applicable, the “sponsor”(our “ former sponsor” or “Holdings”). Enviva Partners GP, LLC, a wholly owned subsidiary of our former sponsor, was our former general partner (the “ former GP”). References to “Enviva,” the “Company,” “we,” “us,” or “our” refer to (i) Enviva Holdings,Inc. and its subsidiaries for the periods following the Conversion and (ii) Enviva Partners, LP isand its subsidiaries for periods prior to the General Partner (the “General Partner”) ofConversion, except where the Partnership. context otherwise requires.
We procure wood fiber and process it into utility-grade wood pellets and load the finished wood pellets into railcars, trucks and barges for transportation to deep-water marine terminals, where they are received, stored and ultimately loaded onto oceangoing vessels for delivery under long-term, take-or-pay off-take contracts to our customers principally in the United Kingdom (the “U.K.”), the European Union, and Europe and increasingly Japan.
We own and operate 910 industrial-scale wood pellet production plants located in the Southeastern United States. In addition to the volumes from our plants, we also procure wood pellets from third parties. Wood pellets are exported from our wholly owned deep-water marine terminalsterminal at the Port of Chesapeake, Virginia, (the “Chesapeake terminal”) and terminal assets at the Port of Wilmington, North Carolina, (the “Wilmington terminal”) and from third-party deep-water marine terminals in Mobile, Alabama, Panama City, Florida, and Savannah, Georgia under a short-term contract, a long-term contract, and a lease and associated terminal services agreement, respectively. We are constructing a deep-water marine terminal at the Port of Pascagoula, Mississippi.
Basis of Presentation
As a result of the Conversion, periods prior to December 31, 2021 reflect Enviva as a limited partnership, not a corporation. References to common units for periods prior to the Conversion refer to common units of Enviva Partners, LP, and references to common stock for periods following the Conversion refer to shares of common stock of Enviva Inc. The primary financial impacts of the Conversion to the consolidated financial statements were (i) reclassification of partnership capital accounts to equity accounts reflective of a corporation and (ii) income tax effects.
On the date of the Conversion, each common unit representing a limited partner interest in the Partnership issued and outstanding immediately prior to the Conversion was exchanged for one share of common stock of the Company, par value $0.001 per share.
On October 14, 2021, the Partnership entered into and closed on an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Partnership, our former sponsor, Enviva Partners Merger Sub, LLC (“Merger Sub”), and the limited partners of our former sponsor (the “Holdings Limited Partners”) set forth in the Merger Agreement. Pursuant to the terms of the Merger Agreement, (a) the Company acquired (i) all of the limited partner interests in our former sponsor and (ii) all of the limited liability company interests in the former GP, and (b) the incentive distribution rights directly held by our former sponsor were cancelled and eliminated (collectively, the “Simplification Transaction”). As a result of the Simplification Transaction, the Company acquired certain assets under development, as well as off-take contracts in varying stages of negotiation. The Simplification Transaction also included the acquisition of a workforce that was historically employed by our former sponsor. On October 14, 2021, the Partnership issued 16.0 million common units to the owners of the former sponsor as consideration for the Simplification Transaction.
The Simplification Transaction was a business combination of entities under common control and net assets acquired were combined at their historical costs with a change in reporting entity. Accordingly, the consolidated financial statements have been retroactively recast to reflect the Simplification Transaction as if the Simplification Transaction had occurred on March 18, 2010, the date Holdings was originally organized. While the Partnership was the surviving entity for legal purposes, Holdings is the surviving entity for accounting purposes. As a result, the historical financial results prior to the Simplification are those of Holdings. Prior to the Simplification Transaction, Holdings controlled the Partnership so the financial statements of the Partnership were consolidated into the financial statements of Holdings and the common units of the Partnership held by the public are reflected as a noncontrolling interest.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Our consolidated financial statements include allthe accounts of the PartnershipEnviva and its wholly owned subsidiaries and controlled subsidiaries.subsidiaries, including a variable interest entity in which we are the primary beneficiary. As managing member, we have the sole power to direct the activities that most impact the economics of the variable interest entity. All intercompany accounts and transactions have been eliminated. We operate and manage our business as 1one operating segment.
Reclassification
Certain prior year amounts have been reclassified from general and administrative expenses to related-party management services agreement (“MSA”) fees to conform to current period presentation on the consolidated statements of operations.
Enviva Pellets Greenwood
On July 1, 2020, we acquired from our sponsor all of the limited liability company interests in Enviva Pellets Greenwood Holdings II, LLC, the indirect owner of Enviva Pellets Greenwood, LLC (“Greenwood”), which owns a wood pellet production plant located in Greenwood, South Carolina (the “Greenwood plant”), for a purchase price of $132.0 million, subject to certain adjustments (such transaction, the “Greenwood Drop-Down”). On the date of and in connection with the Greenwood Drop-Down, our sponsor assigned five biomass off-take contracts to us (collectively, the “Associated Off-Take Contracts”). The Associated Off-Take Contracts call for aggregate annual deliveries of 1.4 million metric tons per year (“MTPY”) and mature between 2031 and 2041. Our sponsor also assigned two fixed-rate shipping contracts and partially assigned two additional fixed-rate shipping contracts to us.
The Greenwood Drop-Down was an asset acquisition between entities under common control and accounted for on the carryover basis of accounting. Accordingly, the consolidated financial statements for the period beginning July 1, 2020 reflect the acquisition. See Note 3, Transactions Between Entities Under Common Control.
On the date of the Greenwood Drop-Down:
We entered into an agreement with our sponsor, pursuant to which our sponsor agreed to reimburse us for any construction costs incurred for the planned expansion of the Greenwood plant in excess of $28.0 million (the “Greenwood Make-Whole Agreement”).
We entered into an agreement with Enviva Management Company, LLC, a Delaware limited liability company and wholly owned subsidiary of our sponsor (together with its affiliates that provide services to us, as applicable, “Enviva Management Company”), pursuant to which (1) Enviva Management Company waived our obligation to pay an aggregate of approximately $37.0 million in management services and other fees payable under our management
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

services agreement with Enviva Management Company for the period from July 1, 2020 through the fourth quarter of 2021 and (2) Enviva Management Company will waive our obligation to pay certain management services and other fees during 2022 unless and until the Greenwood plant’s production volumes equal or exceed 50,000 metric tons (“MT”) in any calendar month, in each case, to provide cash flow support to us during the planned expansion of the Greenwood plant (the “Third EVA MSA Fee Waiver”).
Georgia Biomass Holding LLC
On July 31, 2020, Enviva Pellets Waycross Holdings, LLC, a wholly owned subsidiary of the Partnership,Company, acquired all of the limited liability company interests in Georgia Biomass Holding LLC, a Georgia limited liability company (“Georgia Biomass”), and the indirect owner of a wood pellet production plant located in Waycross, Georgia (the “Waycross plant”), for a purchase price of $175.0 million, subject to certain adjustments (the “Georgia Biomass Acquisition”). In August 2020, Georgia Biomass converted to a limited liability company organized under the laws of the State of Delaware under the name Enviva Pellets Waycross Holdings Sub, LLC.
The Georgia Biomass Acquisition was recorded as a business combination and accounted for using the acquisition method. Assets acquired and liabilities assumed were recognized at fair value on the acquisition date of July 31, 2020, and the difference between the consideration transferred, excluding acquisition-related costs and the fair values of the assets acquired and liabilities assumed was recognized as goodwill. See Note 4, Acquisition.
Enviva Wilmington Holdings, LLC
On April 2, 2019, we acquired (the “Hamlet Drop-Down”) from our sponsor all of the issued and outstanding Class B Units in Enviva Wilmington Holdings, LLC (the “Hamlet JV”), a limited liability company owned by our sponsor and John Hancock Life Insurance Company (U.S.A.) and certain of its affiliates (collectively, as applicable, “John Hancock”). On the date of acquisition, we began to consolidate the Hamlet JV as a variable interest entity of which we are the primary beneficiary. As managing member, we have the sole power to direct the activities that most impact the economics of the Hamlet JV. Additionally, as the Class B Units represent a controlling interest in the Hamlet JV, we account for the Hamlet JV as a consolidated subsidiary, not as a joint venture. The Hamlet JV owns a wood pellet production plant in Hamlet, North Carolina (the “Hamlet plant”) and a firm, 15-year take-or-pay off-take contract with a customer for the delivery of nearly 1.0 million MTPY of wood pellets, following a ramp period. The Hamlet Drop-Down was an asset acquisition between entities under common control and accounted for on the carryover basis of accounting. Accordingly, the consolidated financial statements for the period beginning April 2019 reflect the acquisition. See Note 3, Transactions Between Entities Under Common Control.
(2) Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.
Noncontrolling Interests
Noncontrolling interests include third-party equity ownership in Enviva Wilmington Holdings, LLC (the “Hamlet JV”) and Enviva JV Development Company, LLC (the “Development JV”), each of which are limited liability companies. Prior to the Simplification Transaction, noncontrolling interests also included the third-party, public equity ownership in the Partnership. Noncontrolling interests are presented as a component of equity in the accompanying consolidated balance sheet. The allocation for the Hamlet JV was based on the percentage of units held by third-parties and the Partnership until April 1, 2019, after which there was no allocation to third parties primarily as their capital contributions had all been repaid and substantially all of their preferred return on those capital contributions had been paid. For the Development JV, the allocation of income (loss) is based on the percentage of capital contributions from third-parties and the Partnership. In February 2021, the Partnership purchased the third-party member’s interest in the Development JV. See Note 17, Equity.
Business Combinations
Since the required adoption of Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), on January 1, 2018, determiningDetermining whether an entity has acquired a business or an asset (or a group of assets) is critical because the accounting for a business combination differs significantly from that of an asset acquisition. For transfers between entities under common control, the transfer of a business would represent a change in reporting entity requiring a retrospective adjustment of the combined financial statements. Conversely, a common control transaction involving the transfer of net assets that does not constitute a business is not accounted for as a change in reporting entity and is, therefore, accounted for prospectively. For an acquisition of a business, from an entity not under common control, the overallgeneral principle is that, when an entity (the acquirer) takes control of another entity (the target), the fair value of the underlying exchange transaction is used to establish a new accounting basis for the acquired entity where the acquirer recognizes and measures the assets acquired and liabilities assumed at their full fair values as of the date control is obtained. For an acquisition of an asset, from an entity not under common control, a cost accumulation and allocation model is used under which the cost of the acquisition is allocated to the assets acquired and liabilities assumed.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

We must first evaluate whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. Gross assets acquired should exclude cash and cash equivalents, deferred tax assets and goodwill resulting from the effects of deferred tax liabilities. However, the gross assets acquired should include any consideration transferred (plus the fair value of any noncontrolling interest and previously held interest, if any) in excess of
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
the fair value of net identifiable assets acquired. A tangible asset that is attached to and cannot be physically removed and used separately from another tangible asset (or an intangible asset representing the right to use a tangible asset) without incurring significant cost or significant diminution in utility or fair value to either asset (for example, land and building) should be considered a single asset. In that context, we consider a wood pellet production facility to be a single identifiable asset.
We need to apply judgment to determine what is considered “substantially all” because ASU 2017-01ASC 805 does not provide a bright line for making this assessment. If the “substantially all” threshold is met, the acquired set of assets and activities is not a business. If that threshold is not met, we must evaluate whether the set meets the definition of a business, which consists of inputs and at least one substantive process applied to those inputs that have the ability to contribute to the creation of outputs. If that threshold is not met but the set does not meet the definition of a business, the acquisition would be an asset acquisition.
A business combination is an acquisition of a business from an entity not under common control and is accounted for using the acquisition method. Identifiable assets acquired and liabilities assumed are recognized at fair value on the acquisition date. Goodwill is calculated as the excess of the fair value of the consideration transferred, which excludes acquisition-related costs that are expensed, over the fair value of the net assets recognized and represents the future economic benefits arising from other net assets acquired that could not be individually identified and separately recognized. Fair value measurements may require us to make significant estimates and assumptions. A measurement period, which could be up to one year from the date of acquisition, exists to identify and measure the assets acquired and the liabilities assumed. During the measurement period, provisional amounts may be recognized and those amounts may subsequently be prospectively adjusted to reflect any new information about facts and circumstances that existed at the acquisition date that, if known, would have affected the measurement of these amounts. At the end of the measurement period, any subsequent changes would not be recognized under the acquisition method but would instead follow other accounting principles, which would then generally impact earnings.
Common Control Transactions
Assets and businesses acquired from our sponsor and its controlled subsidiaries are accounted for as common control transactions. For assets acquired in a common control transaction, net assets acquired are accounted for on the carryover basis of accounting and consolidated prospectively as of the transaction date. For businesses acquired in a common control transaction, the net assets acquired are combined at their historical costs and prior periods are recast with historical net equity amounts prior to the transaction date are attributed to the General Partner and any noncontrolling partner interest at carryover basis. If any recognized consideration transferred in such a transaction exceeds the carrying value of the net assets acquired, the excess is treated as a capital distribution to the General Partner. If the carrying value of the net assets acquired exceeds any recognized consideration transferred including, if applicable, the fair value of any limited partner units issued, then that excess is treated as a capital contribution from the General Partner.
Other Comprehensive Income (Loss)
Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, and gains and losses that under GAAP are included in comprehensive income (loss) but excluded from net income (loss). Other comprehensive income (loss) consists of net unrealized gains and losses related to derivative instruments accounted for as cash flow hedges and foreign currency translation adjustments.
Cash and Cash Equivalents
Cash and cash equivalents consist of short-term, highly liquid investments readily convertible into cash with an original maturity of three months or less.
Restricted Cash
Restricted cash consists of cash collateral for an irrevocable standby letter of credit and an amount held in escrow.
Accounts Receivable
Accounts receivable represent amounts billed that are recorded at the invoiced amount and billable under our contracts that are pending finalization of prerequisite billing documentation and do not bear interest. As of December 31, 20202021 and 2019,2020, we had 0no amounts in allowance for doubtful accounts given the lack of historical credit losses and no current expectations of credit losses.
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(In thousands, except number of units, per unit amounts and unless otherwise noted)

Inventories
Inventories consist of raw materials, work-in-progress, consumable tooling and finished goods. Fixed production overhead, including related depreciation expense, is allocated to inventory based on the normal production capacity of the facilities. To the extent we do not achieve normal production levels, we charge such under-absorption of fixed overhead to cost of goods sold in the period incurred.
Consumable tooling consists of spare parts and tooling to be consumed in the production process. Spare parts are expected to be used within a year and are expensed as used. Tooling items are amortized to expense over an estimated service life generally less than one year.
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Inventories are stated at the lower of cost or net realizable value using the first-in, first-out method (“FIFO”) for all inventories. Raw material, production and distribution costs associated with delivering wood pellets to marine terminals and third- and related-partythird-party wood pellet purchase costs are capitalized as a component of inventory. These costs and the finished production overhead allocated to inventory are reflected in cost of goods sold when inventory is sold.
Intangibles
Intangibles primarily consist of favorable or unfavorable customer contracts and an unfavorable shipping contact that were acquired in the Georgia Biomass Acquisition. Intangibles with definite lives are amortized based on the pattern of economic benefit over their estimated useful lives, which are reviewed annually. The intangibles acquired in the Georgia Biomass Acquisition are being amortized on a straight-line basis, as MTmetric tons (“MT”) of wood pellets to be sold or shipped under each contract are constant through the end of such contracts. See Note 13,12, Goodwill and Other Intangibles.
Revenue Recognition
We primarily earn revenue by supplying wood pellets to customers under off-take contracts, the majority of the commitments under which are long-term in nature. Our off-take contracts are considered “take-or-pay” because they include a firm obligation of the customer to take a fixed quantity of product at a stated price and provisions that require that we be compensated in the case of a customer’s failure to accept all or a part of the contracted volumes or termination of a contract by a customer. Each of our long-term off-take contracts definedefines the annual volume of wood pellets that a customer is required to purchase, and we are required to sell, the fixed price per MT for product satisfying a base net calorific value and other technical specifications. These prices are generally fixed for the entire term, however, some may be subject to adjustments which may include annual inflation-based adjustments or price escalators, price adjustments for product specifications, as well as, in some instances, price adjustments due to changes in underlying indices. In addition to sales of our product under these long-term off-take contracts, we routinely sell wood pellets under shorter-term contracts, which range in volume and tenor and, in some cases, may include only one specific shipment. Because each of our off-take contracts is a bilaterally negotiated agreement, our revenue over the duration of such contracts does not generally follow observable current market pricing trends. Our performance obligations under these contracts are the delivery of wood pellets, which we aggregate into MT. We account for each MT as a single performance obligation. Our revenue from the sales of wood pellets we produce is recognized as product sales upon satisfaction of our performance obligation when control transfers to the customer at the time of loading wood pellets onto a ship. The amount of wood pellets loaded onto a ship is determined by management with the assistance of a third-party specialist.
Depending on the specific off‑take contract, shipping terms are either Cost, Insurance and Freight (“CIF”), Cost and Freight (“CFR”) or Free on Board (“FOB”). Under a CIF contract, we procure and pay for shipping costs, which include insurance and all other charges, up to the port of destination for the customer. Under a CFR contract, we procure and pay for shipping costs, which include insurance (excluding marine cargo insurance) and all other charges, up to the port of destination for the customer. Shipping under CIF and CFR contracts after control has passed to the customer is considered a fulfillment activity rather than a performance obligation and associated expenses are included in the price to the customer. Under FOB contracts, the customer is directly responsible for shipping costs.
In some cases, we may purchase shipments of product from third-party suppliers and resell them to other parties in back-to-back transactions (“purchase and sale transactions”). We recognize revenue on a gross basis in product sales when we determine that we act as a principal by having control of the wood pellets before they are transferred to the customer. Indicators of control have included being primarily responsible for fulfilling the promise to provide the wood pellets (such as by contracting to sell wood pellets before contracting to buy them), having inventory risk, or having discretion in establishing the sales price for the wood pellets. The decision as to whether to recognize revenue on a gross or net basis requires significant judgment.
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(In thousands, except number of units, per unit amounts and unless otherwise noted)

We recognize third- and related-party terminal services revenue ratably over the related contract term, which is included in other revenue. Terminal services are performance obligations that are satisfied over time, as customers simultaneously receive and consume the benefits of the terminal services we perform. The consideration is generally fixed for minimum quantities and any services above the minimum are generally billed based on a per-MT rate as variable consideration and recognized as services are performed. Any deficiency payments receivable and probable of being collected from a customer not meeting quarterly minimum throughput requirements are recognized during the related quarter in satisfaction of the related performance obligation.
Variable consideration from off-take contracts arises from several pricing features outlined in our off-take contracts, pursuant to which such contract pricing may be adjusted in respect of particular shipments to reflect differences between certain
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contractual quality specifications of the wood pellets as measured both when the wood pellets are loaded onto ships and unloaded at the discharge port as well as certain other contractual adjustments.
Variable consideration from terminal services contracts arises from price increases based on agreed inflation indices and from above-minimum throughput quantities or services.
We allocate variable consideration under our off-take and terminal services contracts entirely to each performance obligation to which variable consideration relates. The estimate of variable consideration represents the amount that is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty is resolved.
Under our off-take contracts, customers are obligated to pay the majority of the purchase price prior to the arrival of the ship at the customers’ discharge port. The remaining portion is paid after the wood pellets are unloaded at the discharge port. We generally recognize revenue prior to the issuance of an invoice to the customer.
In instances where we have contracts to exchange wood pellets held for sale in the ordinary course of business for similar wood pellets to be sold in the same line of business to facilitate sales to customers other than the parties to the exchange, we account for these exchanges as nonmonetary transactions at the carrying amount of the wood pellets transferred, with no impact to revenue and with no net impact to cost of goods sold once an equal amount of wood pellets have been exchanged. For the sale of the wood pellets received to customers not parties to the exchange, we recognize product sales revenue as described above for off-take contracts. To the extent that these exchanges also include compensation to us for shipping wood pellets, we recognize it as product sales revenue as those wood pellets are loaded and we recognize the shipping costs in cost of goods sold.
Cost of Goods Sold
Cost of goods sold includes the cost to produce and deliver wood pellets to customers, reimbursable shipping-related costs associated with specific off-take contracts with CIF and CFR shipping terms and costs associated with purchase and sale transactions. Distribution costs associated with shipping wood pellets to customers are expensed as incurred. The calculation of cost of goods sold is based on estimates used in the valuation of the FIFO inventory and in determining the specific composition of inventory that is sold to each customer.
Accrued and other current liabilitiesOther Current Liabilities
Accrued and other current liabilities primarily includes liabilities related to construction in progress, amounts related to cost of goods sold such as utility costs at our production facilities, distribution costs associated with shipping wood pellets to customers, and costs associated with the purchase of wood fiber and wood pellets not yet invoiced.invoiced and compensation and benefits.
Derivative Instruments
Derivative instruments are classified as either assets or liabilities on a gross basis and carried at fair value and included in prepaid expenses and other current assets, other long-term assets, accrued and other current liabilities and other long-term liabilities on the consolidated balance sheets. Since August 2018During the three years ended December 31, 2021 and since and March 2020, we have no longer applied hedge accounting treatment to any foreign currency and interest rate derivatives, respectively. Derivative instruments that did not or ceased to qualify, or are no longer designated, as accounting hedges are adjusted to fair value through earnings in the current period.
To the extent hedge accounting had previously been applied, it was applied to qualifying cash flow hedges with unrealized changes in their fair value recognized as accumulated other comprehensive income in partners’ capitalequity to the extent they could be considered effective in accordance with the accounting standards on derivatives and hedging applicable during those periods.
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(In thousands, except number of units, per unit amounts and unless otherwise noted)

The effective portion of qualifying foreign currency hedges was reclassified into revenue in the same period or periods during which the hedged revenue affected earnings. The effective portion of qualifying interest rate swaps was reclassified into interest expense in the same period or periods during which the hedged interest expense affects earnings.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost, which includes the fair values of assets acquired. Equipment under finance leases is stated at the present value of minimum lease payments. Useful lives of assets are based on historical experience and other relevant information. The useful lives of assets are adjusted when changes in the expected physical life of the asset, its
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planned use, technological advances, or other factors show that a different life would be more appropriate. Changes in useful lives are recognized prospectively.
Depreciation is calculated using the straight-line method based on the estimated useful lives of the related assets. Plant and equipment held under finance leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset.
Construction in progress primarily represents expenditures for the development and expansion of facilities. Capitalized interest cost and all direct costs, which include equipment and engineering costs related to the development and expansion of facilities, are capitalized as construction in progress. Depreciation is not recognized for amounts in construction in progress.
Normal repairs and maintenance costs are expensed as incurred. Amounts incurred that extend an asset’s useful life, increase its productivity or add production capacity are capitalized. Direct costs, such as outside labor, materials, internal payroll and benefit costs, incurred during the construction of a new plant are capitalized; indirect costs are not capitalized.
The principal useful lives are as follows:
AssetEstimated useful life
Land improvements15 to 1725 years
Buildings5 to 40 years
Machinery and equipment2 to 2530 years
Vehicles5 to 6 years
Furniture and office equipment2 to 10 years
Leasehold improvementsShorter of estimated useful life or lease term, generally 10 years
Costs and accumulated depreciation applicable to assets retired or sold are removed from the accounts and any resulting gain or loss is included in the consolidated statements of operations.
Long-lived assets,A long-lived asset (group), such as property, plant and equipment and amortizable intangible assets, areis tested for impairment whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset (group) may not be recoverable. There were no such indicators that would require impairment testing to be performed during the periods presented.years ended December 31, 2021 and 2020.
Leases
We have operating and finance leases related to real estate, machinery, equipment and other assets where we are the lessee. Operating leases with an initial term of 12 months or less are not recorded on the balance sheet but are recognized as lease expense on a straight-line basis over the applicable lease terms. Operating and finance leases with an initial term longer than 12 months are recorded on the balance sheet and classified as either operating or finance.
Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Our leases do not contain any material residual value guarantees or restrictive covenants or subleases.covenants. In addition to fixed lease payments, we have contracts that incur variable lease expense related to usage (e.g. throughput fees, maintenance and repair and machine hours), which are expensed as incurred. Our leases have remaining terms of one to 2740 years, some of which include options to extend the leases by up to 5 years.multiple five-year extensions. Our leases are generally noncancelable. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold
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improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise.
An incremental borrowing rate is applied to our leases for balance sheet measurement. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for a collateralized borrowing over a similar term of the lease payments as of the commencement date.
We adopted ASU 2016-02, Leases, on and as of January 1, 2019 using the modified retrospective transition method, which we applied to all leases existing at the date of initial application of the ASU. We elected to use the effective date as the date of initial application, as opposed to the beginning of the earliest comparative period presented in the financial statements; consequently, financial information and disclosures are not presented under the new standard for periods prior to January 1, 2019. We elected the package of three practical expedients under the transition guidance within the new standard, which permitted us to not reassess our prior conclusions under the previous guidance concerning lease identification, lease classification and initial direct leasing costs. We elected the practical expedient to not evaluate existing or expired land easements that were not accounted for as leases under previous guidance. We did not, however, elect the separate practical expedient pertaining to the use of hindsight in determining the lease term for existing leases.
For contracts that contain lease and nonlease components, nonlease components are separated and accounted for under other relevant accounting standards. We made an accounting policy election to not separate nonlease components from lease
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components for heavy machinery and equipment.equipment and buildings.
Operating leases are included in operating lease ROU assets, accrued and other current liabilities and long-term operating lease liabilities on our consolidated balance sheets. Finance leases are included in property, plant and equipment, the current portion of long-term debt and finance lease obligations and long-term debt and finance lease obligations on our consolidated balance sheets. Changes in ROU assets and operating lease liabilities are included net in change in operating lease liabilities on the consolidated statement of cash flows.
Debt Issuance Costs and Original Issue Discounts and Premiums
Debt issuance costs and original issue discounts and premiums incurred with debt financing are capitalized and amortized over the life of the debt. Amortization expense is included in interest expense. If a debt instrument is retired before its scheduled maturity date, any related unamortized debt issuance costs and original issue discounts and premiums are written-off as gain or loss on debt extinguishment in the same period.
Unamortized debt issuance costs and original issue discounts and premiums related to a recognized debt liability are recognized as a direct deduction from the carrying amount of the related long-term debt and are amortized using the effective interest method. Unamortized debt issuance costs related to our revolving credit commitments are recognized as an asset and are amortized using the straight-line method.
Goodwill
Goodwill represents the purchase price paid for acquired businesses in excess of the identifiable acquired assets and assumed liabilities. Goodwill is not amortized but is tested for impairment annually and whenever an event occurs or circumstances change such that it is more likely than not that the fair value of the reporting unit is less than its carrying amounts. At December 31, 2020 and 2019, we identified
Impairment testing for goodwill is required to be done at the Partnership as having 1 reporting unit level. A reporting unit is an operating segment or one level below an operating segment (also known as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that correspondedcomponent. Enviva Partners represents a single operating segment that has been deemed to our 1 reportable segment. We have selected December 1 to perform our annual goodwill impairment test.be a single reporting unit.
For the years ended December 31, 20202021 and 2019,2020, we performed a quantitative assessment using the market approach and determined the fair value of the reporting unit exceeded its carrying amount. For the year ended December 31, 2018, we performed a qualitative assessment and determined that it was more likely than not that the estimated fair value of the reporting unit substantially exceeded the related carrying value of our reporting unit. There have been no impairments to the carrying value of the Partnership’sour goodwill during the periods presented. See Note 13,12, Goodwill and Other Intangibles.
Unit-BasedNon-Cash Equity-Based Compensation and Other Expense
Employees,Our employees, consultants and directors of the General Partner and any of its affiliates are eligible to receive equity awards and other forms of compensation under the Enviva Partners, LPInc. Long-Term Incentive Plan (the “LTIP”). PhantomRestricted stock units issued in
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(In thousands, except number of units, per unit amounts and unless otherwise noted)

tandem with corresponding distributiondividend equivalent rights (“DERs”) are granted to our employees of Enviva Management Company that provide services to us and to independent directors of the General Partner. Phantom unitdirectors. These equity awards vest subject to the satisfaction of service requirements and/or the achievement of certain performance goals.goals and the grant fair-value of these equity awards are recognized as non-cash equity-based compensation and other expense on a ratable basis over their vesting period. Once these conditions have been met, common unitsstock in the PartnershipCompany will be delivered to the holder of these equity awards. Forfeitures are recognized as they occur. Modifications to these equity awards resulting in incremental fair value over the phantom units. For accounting purposes, units granted to employees of our affiliates (excludingpre-modification fair value are recognized as non-cash equity-based compensation and other expense over the General Partner, the Partnership and subsidiaries of the Partnership) are treated as if they were distributed by the Partnership. Such affiliates recognize compensation expense for the phantom units awarded to their employees, a portion of which is allocated to us under the MSAs (see Note 15, Related-Party Transactions-Management Services Agreements and Note 18, Equity-Based Awards).remaining vesting period. We also recognize non-cash equity-based compensation and other expense for phantomrestricted stock units awarded to independent directors. As of December 31, 2021 and 2020, we have the ability to settle certain of our outstanding phantomrestricted stock unit awards under the LTIP in either cash or common unitsstock at our election. As we have the ability to settle the awards in common units as of December 31, 2020 and as we reasonably expect to be able to deliver common unitsstock at the settlement date, we have classified all of our outstanding phantomrestricted stock unit awards as equity on our balance sheets. See Note 18, Equity-Based Awards.
Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
Fair Value Measurements
We apply authoritative accounting guidance for fair value measurements of financial and nonfinancial assets and liabilities. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. We determine fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
Level 1 Inputs: Unadjusted, quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
Level 2 Inputs: Other than quoted prices included in Level 1, inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
Income taxes
SubstantiallyEffective December 31, 2021, Enviva Partners, LP converted from a Delaware limited partnership to a Delaware corporation named Enviva Inc. (the “Conversion”). Following the Conversion, we became subject to U.S. federal, foreign, state, and local corporate income tax. In addition, certain of Enviva’s subsidiaries are subject to federal, state, and local income, franchise, or capital taxes at the entity level and the related tax provision is reflected in the Consolidated Financial Statements. Prior to the Conversion, substantially all of ourEnviva’s operating subsidiaries arewere organized as limited partnerships and entities that arewere disregarded entities for U.S. federal and applicable state income tax purposes. As a result, those entities disregarded for U.S. federal and state income tax purposes are not subjecttaxable periods ending on or prior to U.S. federal and most state income taxes. Our partners andthe conversion, Enviva’s unitholders are liable for these income taxes on their share of ourEnviva’s taxable income. Some states impose franchise
As a result of the Conversion, Enviva recognized a step-up in the tax basis of certain assets that will be recovered as the assets are sold or the basis is amortized. The calculation and capital taxesallocation of the step-up in tax basis to the various assets of the company was determined by management with the assistance of a third-party specialist. The basis information used was based on an estimate of the Partnership. Suchbasis in Enviva Inc. as of December 31, 2021. The final amount of the step-up in tax basis may differ as basis information, including the Partnership’s tax basis in underlying assets and liabilities based on 2021 tax return information, becomes available and is finalized.
Income taxes are not material toaccounted for using the consolidated financial statementsasset and have been included in otherliability method of accounting. Under this method, deferred income (expense) as incurred.
Onetaxes reflect the net tax effects of our subsidiaries formed in connection with the Georgia Biomass Acquisition, Enviva Pellets Waycross Holdings, LLC, is an entity taxable as a corporation and is subject to U.S. federal income tax and accounts for income tax under the liability method. Deferred taxes are recognized for future tax consequences attributable totemporary differences between the financial statement carrying amountsreporting and tax bases of existing assets and liabilities and their respectiveare measured using the applicable enacted tax basisrates and net operating loss carryforwards. laws that will be in effect when such differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. When evaluating the realizability of the deferred tax assets, all evidence, both positive and negative, is considered. Items considered when evaluating the need for a valuation allowance include historical book losses, future reversals of existing temporary differences, tax planning strategies and expectations of future earnings.
For a particular tax‑paying component of an entity and within a particular tax jurisdiction, deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable incomeoffset and presented as a single amount, as applicable, in the years in which those temporary differences are expected to be recovered or settled. The effectaccompanying statements of any tax rate change on deferred taxes is recognized in the period that includes the enactment date of the tax rate change. Realization of deferred tax assets is assessed on an annual basis and, unless a deferred tax asset is more likely than not to be utilized, a valuation allowance is recorded to write down the deferred tax assets to their net realizable value.
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(In thousands, except number of units, per unit amounts and unless otherwise noted)

financial condition.
Recently Adopted Accounting Standards
On January 1, 2020,2021, we adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how entities measure credit losses for most financial assets. The adoption did not have a material impact on the financial statements.
Recently Issued Accounting Standards not yet Adopted
In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12-2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The standardTaxes, which removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation, and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We are adopting the standard on January 1, 2021 and do not expect the adoption to have a material impact on our consolidated financial statements.
(3)Transactions Between Entities Under Common Control
Enviva Pellets Greenwood Holdings II, LLC
The $132.0 million purchase price for the Greenwood Drop-Down consisted of a cash payment of $129.7 million, net of a purchase price adjustment of $2.3 million.
The change in net assets on July 1, 2020 from the Greenwood Drop-Down included $67.8 million of net assets acquired. The following table outlines the changes in consolidated net assets resulting from the Greenwood Drop-Down on July 1, 2020.
Assets:
Cash and cash equivalents$29 
Accounts receivable, net25 
Inventories5,165 
Prepaid expenses and other current assets21 
Property, plant and equipment, net104,662 
Operating lease right-of-use assets7,850 
Intangible asset, net845 
Other long-term assets71 
Total assets118,668 
Liabilities:
Accounts payable1,951 
Accrued and other current liabilities4,303 
Interest payable366 
Seller Note36,880 
Finance lease obligations699 
Long-term operating lease liabilities6,649 
Total liabilities50,848 
Net assets contributed to Partnership$67,820 
The unaudited pro forma combined revenue and net income presented below have been prepared as if the Greenwood Drop-Down had occurred on January 1, 2019. The unaudited pro forma financial information has been derived from the consolidated statements of operations of the Partnership and Greenwood for the below periods. The historical financial information has been
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adjusted in the unaudited combined pro forma informationrecognizing deferred taxes for tax goodwill, and allocating taxes to give effect to pro forma events that are (1) directly attributable to the Greenwood Drop-Down, (2) factually supportable and (3) expected tomembers of a consolidated group. The adoption did not have a continuingmaterial impact on the financial statements.
Recently Issued Accounting Standards not yet Adopted
Currently, there are no recently issued accounting standards not yet adopted by us that we expect to be reasonably likely to materially impact our financial position, results of operations followingor cash flows.
(3)Transactions Between Entities Under Common Control
Recast of Historical Financial Statements
The Simplification Transaction was a business combination of entities under common control and net assets acquired were combined at their historical costs with a change in reporting entity. Accordingly, the Greenwood Drop-Down. The unaudited pro formaconsolidated financial information does not include non-recurring items suchstatements have been retroactively recast to reflect the Simplification Transaction as transaction costs relatedif the Simplification Transaction had occurred on March 18, 2010, the date Holdings was originally organized. While the Partnership was the surviving entity for legal purposes, Holdings is the surviving entity for accounting purposes. As a result, the historical financial results prior to the acquisition. The unaudited pro formaSimplification are those of Holdings. Prior to the Simplification Transaction, Holdings controlled the Partnership so the financial information as presented below is for informational purposes only and is not necessarily indicativestatements of the resultsPartnership were consolidated into the financial statements of operations that would have been achieved ifHoldings and the Greenwood Drop-Down had taken place on January 1, 2019.
The unaudited pro forma combined revenue and net loss for the years ended December 31, 2020 and 2019 are as follows:
20202019
Revenue$873,815 $682,604 
Net loss(4,687)(46,323)
Enviva Wilmington Holdings, LLC
The $165.0 million purchase price for the Hamlet Drop-Down consisted of (1) an initial cash payment of $24.7 million, net of a purchase price adjustment of $0.3 million, on April 2, 2019, (2) the issuance of 1,681,237 unregistered common units at a value of $29.74 per unit, or $50.0 million of common units, on April 2, 2019, (3) $50.0 million in cash, paid on June 28, 2019 and (4) a third and final cash payment of $40.0 million paid on January 2, 2020.
The changes in net assets at carryover basis on April 2, 2019 included $120.9 million net assets of the Hamlet JV, net ofPartnership held by the elimination of $3.0 million of net related-party receivables and payables. The following table outlines the addition of net assets resulting from the Hamlet Drop-Down on April 2, 2019.
Assets:
Cash and cash equivalents$3,426 
Related-party receivables241 
Prepaid expenses and other current assets22 
Property, plant and equipment, net140,446 
Other long-term assets
Total assets144,143 
Liabilities:
Accounts payable6,395 
Related-party payables1,923 
Accrued and other current liabilities14,965 
Finance lease obligations
Total liabilities23,286 
Net assets contributed to Partnership$120,857 

public are reflected as a noncontrolling interest.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
The following table presents changes as a result of the Simplification Transaction for the common control entities acquired to previously reported amounts in the audited consolidated balance sheet as of December 31, 2020 included in Enviva’s annual report on Form 10-K for the year ended December 31, 2020:
As of December 31, 2020
As ReportedCommon Control Entities AcquiredTotal (Recast)
Assets
Current assets:
Cash and cash equivalents$10,004 $56,110 $66,114 
Restricted cash— 1,561 1,561 
Accounts receivable124,212 — 124,212 
Other accounts receivable— 15,112 15,112 
Related-party receivables, net2,414 (2,414)— 
Inventories42,364 2,860 45,224 
Prepaid expenses and other current assets16,457 (9,637)6,820 
Total current assets195,451 63,592 259,043 
Property, plant and equipment, net1,071,819 170,602 1,242,421 
Operating lease right-of-use assets51,434 60,493 111,927 
Goodwill99,660 — 99,660 
Other long-term assets11,248 1,695 12,943 
Total assets$1,429,612 $296,382 $1,725,994 
Liabilities and Equity
Current liabilities:
Accounts payable$15,208 $7,190 $22,398 
Accrued liabilities and other current liabilities108,976 38,839 147,815 
Current portion of interest payable24,642 14 24,656 
Current portion of long-term debt and finance lease obligations13,328 1,223 14,551 
Related-party note payable— 20,000 20,000 
Deferred revenue— 4,855 4,855 
Total current liabilities162,154 72,121 234,275 
Long-term debt and finance lease obligations912,721 777 913,498 
Long-term operating lease liabilities50,074 61,917 111,991 
Deferred tax liabilities, net13,217 12,001 25,218 
Other long-term liabilities15,419 15,933 31,352 
Total liabilities1,153,585 162,749 1,316,334 
Commitments and contingencies
Total equity276,027 133,633 409,660 
Total liabilities and equity$1,429,612 $296,382 $1,725,994 
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ENVIVA INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
The following tables present the changes as a result of the Simplification Transaction to previously reported amounts in the audited consolidated statements of operations for the years ended December 31, 2020 and 2019 included in Enviva’s annual report on Form 10-K for the year ended December 31, 2020:
Year Ended December 31. 2020
As ReportedCommon Control Entities AcquiredTotal (Recast)
Net revenue$875,079 $(117)$874,962 
Income (loss) from operations61,778 (122,208)(60,430)
Net income (loss)17,080 (123,404)(106,324)
Less net loss attributable to noncontrolling interests— 20,034 20,034 
Net income (loss) attributable to Enviva Inc.17,080 (103,370)(86,290)
Year Ended December 31, 2019
As ReportedCommon Control Entities AcquiredTotal (Recast)
Net revenue$684,393 $(825)$683,568 
Income (loss) from operations44,679 (130,921)(86,242)
Net loss(2,943)(132,041)(134,984)
Less net loss attributable to noncontrolling interests— 53,480 53,480 
Net loss attributable to Enviva Inc.(2,943)(78,561)(81,504)
The following tables present the changes as a result of the Simplification Transaction to previously reported amounts in the audited consolidated statements of cash flows for the years ended December 31, 2020 and 2019 included in Enviva’s annual report on Form 10-K for the year ended December 31, 2020:
Year Ended December 31. 2020
As ReportedCommon Control Entities AcquiredTotal (Recast)
Net cash provided by (used in) operating activities$119,335 $(104,936)$14,399 
Net cash (used in) provided by investing activities(396,805)12,836 (383,969)
Net cash provided by financing activities278,421 128,100 406,521 
Net increase in cash, cash equivalents and restricted cash$951 $36,000 $36,951 
Year Ended December 31, 2019
As ReportedCommon Control Entities AcquiredTotal (Recast)
Net cash provided by (used in) operating activities$53,860 $(109,213)$(55,353)
Net cash (used in) provided by investing activities(177,483)32,283 (145,200)
Net cash provided by financing activities130,216 74,258 204,474 
Net increase (decrease) in cash, cash equivalents and restricted cash$6,593 $(2,672)$3,921 
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
(4) Acquisition
Purchase Price Allocation
The Georgia Biomass Acquisition closed on July 31, 2020 and was accounted for as a business combination using the acquisition method of accounting. The following table summarizes the purchase price and the fair values of the amounts recorded for identifiable assets acquired and liabilities assumed at the acquisition date of July 31, 2020.
Purchase price:
Cash paid by the Partnership at closing$168,338 
Reimbursement to the Partnership of certain acquisition-related costs, net161 
Settlement of payable from the Partnership to Georgia Biomass(3,684)
Payment in relation to the Georgia Biomass Acquisition164,815 
Receivable from purchase price adjustment(850)
$163,965 
Identified net assets acquired:
Cash$1,516 
Accounts receivable124 
Inventories5,774 
Prepaid expenses and other current assets792 
Intangible assets5,700 
Property, plant and equipment170,603 
Operating lease right-of-use assets14,716 
Accounts payable(390)
Accrued and other current liabilities(9,472)
Current portion of long-term finance lease obligations(926)
Long-term finance lease obligations(3,733)
Long-term operating lease liabilities(13,356)
Deferred tax liability, net(13,148)
Intangible liabilities(7,400)
Other long-term liabilities(880)
Identifiable net assets acquired149,920 
Goodwill14,045 
Total purchase price$163,965 
The opening balance sheet from July 31, 2020 has changed since what had been preliminarily included in our consolidated balance sheet as of September 30,December 31, 2020. As a result, goodwill decreased by $1.6 million, mainly driven by the change in certain intangible liabilities of $2.5 million resulting from updated information received offset by the impact on deferred taxes. The measurement period has now ended as the purchase price and the purchase price allocation have been finalized.
The net assets of Georgia Biomass were recorded at their estimated fair values. Significant inputs used to estimate the fair values of certain net assets acquired included estimates of the: (1) replacement cost for property, plant and equipment as if each asset was new as of the acquisition date, which was then adjusted for the depreciation and any obsolescence since the date Georgia Biomass originally acquired that asset; (2) market prices for finished goods inventory and for customer and shipping contracts; (3) incremental borrowing rates as of the acquisition date for leases acquired; and (4) appropriate discount rates.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Goodwill is calculated as the excess of the fair value of the consideration transferred over the fair value of the net assets recognized and represents the future economic benefits arising from other net assets acquired that could not be individually identified and separately recognized. We believe that the primary items that generated goodwill include both (1) the value of the synergies created between the acquired assets and our pre-existing assets and long-term, take-or-pay off-take contracts and (2) our expected ability to grow the combined business by leveraging the combined business experience and the expanded footprint. None of the goodwill is expected to be deductible for tax purposes.
In connection with the Georgia Biomass Acquisition, acquisition-related costs through December 31, 2020 arewere approximately $3.9 million and are included within selling, general, administrative, and administrativedevelopment expenses on the consolidated statements of operations. These acquisition-related costs do not include integration costs.
Post-acquisition and pro forma financial information
The consolidated statements of operations for the year ended December 31, 2020 include $45.8 million of revenue and $9.7 million of net loss from the Georgia Biomass Acquisition since July 31, 2020.
The unaudited pro forma combined revenue and net income presented below have been prepared as if the Georgia Biomass Acquisition had occurred on January 1, 2019. The unaudited pro forma financial information has been derived from the consolidated statements of operations of the Partnership for the below periods and from the consolidated abbreviated statements of revenues and direct expenses of Georgia Biomass for the six months ended June 30, 2020 and the year ended December 31, 2019. The abbreviated statements of revenues and direct expenses of Georgia Biomass were prepared for the purposes of complying with the requirements of Rule 3-05 of Regulation S-X as no separate financial statements of Georgia Biomass had previously been prepared. The abbreviated statements of revenues and direct expenses of Georgia Biomass include the revenues and direct expenses directly attributable to manufacturing and distributing wood pellets to customers in the United Kingdom and Europe by Georgia Biomass.
The unaudited pro forma financial information reflects the effects of applying certain purchase price accounting adjustments to the historical financial information based on the fair value of the identified net assets acquired as of July 31, 2020. The historical financial information has been adjusted in the unaudited pro forma information to give effect to pro forma events that are (1) directly attributable to the Georgia Biomass Acquisition, (2) factually supportable and (3) expected to have a continuing impact on our results of operations following the Georgia Biomass Acquisition. The unaudited pro forma financial information does not include non-recurring items such as transaction costs related to the acquisition. The unaudited pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the Georgia Biomass Acquisition had taken place on January 1, 2019.
The unaudited pro forma combined revenue and net income for the years ended December 31, 2020 and 2019 are as follows:
20202019
Revenue$957,537 $845,340 
Net income16,407 9,540 
(5) Revenue
We disaggregate our revenue into two categories: product sales and other revenue. Product sales includes sales of wood pellets. Other revenue includes fees associated with customer requests to cancel, defer, or accelerate shipments in satisfaction of the related performance obligation and third- and related-party terminal services fees. Other revenue also includes fees received for other services, including for sales and marketing, scheduling, sustainability, consultation, shipping and risk management services, where the revenue is recognized when we have satisfied the performance obligation and have a right to the corresponding fee. These categories best reflect the nature, amount, timing and uncertainty of our revenue and cash flows.
Performance Obligations
As of December 31, 2020,2021, the aggregate amount of consideration from contracts with customers allocated to the performance obligations that were unsatisfied or partially satisfied was approximately $14.3$18.2 billion. This amount excludes forward prices related to variable consideration including inflation, foreign currency and commodity prices. Also, this amount excludes the effects of the related foreign currency derivative contracts as they do not represent contracts with customers. We
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

expect to recognize approximately 7.0% of our remaining performance obligations as revenue in 2021, an additional 9.0% byeach of the years ending 2022 and 2023 and the balance thereafter. Our off-take contracts expire at various times through 20432045 and our terminal services contract expires in 2021.2023.
Variable Consideration
Variable consideration from off-take contracts arises from several pricing features in our off-take contracts, pursuant to which such contract pricing may be adjusted in respect of particular shipments to reflect differences between certain contractual quality specifications of the wood pellets as measured both when the wood pellets are loaded onto ships and unloaded at the discharge port as well as certain other contractual adjustments.
Variable consideration from our terminal services contract which was insignificant for the years ended December 31, 2020, 2019, and 2018, arises from price increases based on agreed inflation indices and from above-minimum throughput quantities or services. There was no variable consideration from our terminal services contract for the year ended December 31, 2021. For the years ended December 31, 2020 and 2019, variable consideration from our terminal service contract was insignificant.
For the year ended December 31, 2021 and 2020, we recognized $0.3 million and $0.1 million, respectively, of product sales revenue related to performance obligations satisfied in previous periods. For the year ended December 31, 2019, product sales revenue was reduced by $0.1 million related to performance obligations satisfied in previous periods. For the year ended December 31, 2018, we recognized an insignificant amount of revenue related to performance obligations satisfied in previous periods.
Contract Balances
Accounts receivable related to product sales as of December 31, 2021 and 2020 and 2019 were $108.5$91.3 million and $67.7$108.5 million, respectively. Of these amounts, $95.0$61.3 million and $64.7$95.0 million, as of December 31, 20202021 and 20192020 respectively, related to amounts that were not yet billable under our contracts with customers pending finalization of prerequisite billing documentation. The amounts that havehad not been billed are expectedbilled upon receipt of prerequisite billing documentation, where substantially all is typically billed one to betwo weeks after full loading of the vessel, and where the remaining balance is typically billed withinone to two months.weeks after discharge of the vessel.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
As of December 31, 2020 and2021, we had 0 deferred revenue for future performance obligations under contracts associated with off-take contracts. As of December 31, 2019,2020, we had $4.9 million and $4.1 million, respectively of deferred revenue for future performance obligations under contracts associated with off-take contracts.
Other
Accrued and other current liabilities included approximately $50.6 million and $19.8 million at December 31, 2020 and, 2019, respectively, for amounts associated with our product sales.
(6) Significant Risks and Uncertainties, Including Business and Credit Concentrations
Our business is significantly impacted by greenhouse gas emission and renewable energy legislation and regulations in the U.K., European Union (“EU”) as well as its member states and Japan. If the U.K., the EU or its member states or Japan significantly modify such legislation or regulations, then our ability to enter into new contracts as our existing contracts expire may be materially affected.
Our current product sales are primarily to industrial customers located in the U.K., Denmark, Japan, Belgium, and the Netherlands. Product sales to third-party customers that accounted for 10% or a greater share of consolidated product sales for each of the years ended December 31 are as follows:
20202019
2020201920182021(Recast)(Recast)
Customer ACustomer A40%48%46%Customer A32 %40 %48 %
Customer BCustomer B9%10%11%Customer B%%10 %
Customer CCustomer C23%20%16%Customer C17 %23 %20 %
Customer DCustomer D11%15%17%Customer D%11 %15 %
Customer ECustomer E18 %%— %
(7) Inventories
Inventories consisted of the following as of December 31:
2020
2021(Recast)
Raw materials and work-in-process$21,995 $15,360 
Consumable tooling22,952 21,855 
Finished goods12,770 8,009 
Total inventories$57,717 $45,224 
(8) Property, Plant, and Equipment, net
Property, plant, and equipment, net consisted of the following as of December 31:
2020
2021(Recast)
Land$26,414 $26,040 
Land improvements61,850 60,110 
Buildings321,577 316,706 
Machinery and equipment859,115 800,252 
Vehicles8,318 6,176 
Furniture and office equipment24,840 16,711 
Leasehold improvements22,101 7,462 
Property, plant and equipment1,324,215 1,233,457 
Less accumulated depreciation(395,618)(307,775)
Property, plant and equipment, net928,597 925,682 
Construction in progress569,600 316,739 
Total property, plant and equipment, net$1,498,197 $1,242,421 
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

(7) Inventory ImpairmentTotal depreciation expense and Asset Disposal
On February 27, 2018, a fire occurred at the Chesapeake terminal, causing damage to equipment and approximately 43,000 MT of wood pellets (the “Chesapeake Incident”). As part of our risk management process, we maintain certain insurance policies, which are subject to deductibles and sublimits for each covered event. When recovery of all or a portion of property damage loss or other covered expenses through insurance proceeds is probable, a receivable is recorded and the loss or expense is reduced up to the amount of the total loss or expense. No gain or income resulting from business interruption insurance is recorded until all contingenciescapitalized interest related to construction-in-progress were as follows for the insurance claim have been resolved.years ended December 31:
To meet our contractual obligations to our customers, we incurred incremental costs to commission temporary wood pellet storage
20202019
2021(Recast)(Recast)
Depreciation expense$92,630 $80,372 $64,853 
Capitalized interest related to construction in progress20,166 9,423 2,104 
We recorded loss on disposal of assets of $10.2 million, $8.7 million and handling and ship loading operations (collectively, “business continuity activities”) at nearby locations. The wood pellets from our production plants in$3.6 million for the Mid-Atlantic region were delivered to such temporary locations as well as to the Wilmington terminal, which increased our distribution costs. We incurred $60.3 million related to asset impairment, inventory write-off and disposal costs, emergency response costs, asset repair costs and business continuity activities as a result of the Chesapeake Incident. During the yearyears ended December 31, 2018, we recognized recoveries of $62.1 million related to the Chesapeake Incident, which included $25.5 million of business continuity insurance recoveries, recorded in cost of goods sold,2021, 2020 and $1.8 million of business interruption insurance recoveries, recorded in other income, for lost profits from both damaged wood pellets and the subsequent reduction2019, respectively, in the productionordinary course of wood pellets. At December 31, 2018, $3.8 million of probable insurance recoveries were included in insurance receivables; we received the $3.8 million in probable insurance recoveries in February 2019 plus an additional $0.5 million recognized as other income in 2019.
(8) Inventories
Inventories consisted of the following at December 31:
20202019
Raw materials and work-in-process$12,500 $9,795 
Consumable tooling21,855 20,485 
Finished goods8,009 2,718 
Total inventories$42,364 $32,998 
operating our plants.
(9) Property, PlantLeases
Operating lease ROU assets and Equipment, netliabilities and finance leases as of December 31:
Property, plant and equipment, net consisted
2020
2021(Recast)
Operating leases:
Operating lease right-of-use assets$108,846 $111,927 
Current portion of operating lease liabilities$8,187 $5,799 
Long-term operating lease liabilities122,252 111,991 
Total operating lease liabilities$130,439 $117,790 
Finance leases:
Property plant and equipment, net$25,052 $25,378 
Current portion of long-term finance lease obligations$8,074 $10,051 
Long-term finance lease obligations10,358 11,552 
Total finance lease liabilities$18,432 $21,603 
Pascagoula leases certain real estate on which it is constructing a marine export terminal facility (the “Enviva System”). In addition, Pascagoula is party to an exclusive lease for terminal assets, on which the Enviva system will depend, to be constructed by Jackson County Port Authority (the “JCPA system”). The leases each have a 20-year term, with 4 five-year renewal options. Total future minimum lease payments over the 40-year life of the followingEnviva System lease are estimated to be $27.6 million. For the JCPA System, there are two payment options for the exclusive right to use it for what is expected to be approximately $24.0 million plus interest. The JCPA system lease is accounted for as a “build-to-suit” lease and is recorded as construction-in-progress with a related long-term liability in the consolidated balance sheet at December 31:
20202019
Land$22,611 $15,226 
Land improvements60,110 56,637 
Buildings316,706 217,167 
Machinery and equipment799,881 588,447 
Vehicles3,105 635 
Furniture and office equipment8,202 6,822 
Leasehold improvements1,029 1,029 
Property, plant and equipment1,211,644 885,963 
Less accumulated depreciation(295,921)(203,695)
Property, plant and equipment, net915,723 682,268 
Construction in progress156,096 69,512 
Total property, plant and equipment, net$1,071,819 $751,780 
Accrued amounts for property, plant and equipment and construction in progress included in accrued and other current liabilities were $10.8$18.0 million and $9.4 million atas of December 31, 2020 and 2019.2021.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Total depreciation expense was $72.2 million, $51.6 million and $40.6 million for the years ended December 31, 2020, 2019 and 2018, respectively. Total interest capitalized related to construction in progress was $6.1 million, $2.1 million and $0.2 million for the years ended December 31, 2020, 2019 and 2018 respectively. We recorded loss on disposal of assets of $7.0 million, $3.1 million and $2.4 million for the years ended December 31, 2020, 2019 and 2018, respectively, primarily attributable to the disposal of assets replaced in connection with maintenance capital expenditures.
(10) Leases
Operating lease ROU assets and liabilities and finance leases were as follows as of December 31, 2020 and 2019:
20202019
Operating leases:
Operating lease right-of-use assets$51,434 $32,830 
Current portion of operating lease liabilities$3,450 $1,439 
Long-term operating lease liabilities50,074 33,469 
Total operating lease liabilities$53,524 $34,908 
Finance leases:
Property plant and equipment, net$24,246 $7,398 
Current portion of long-term finance lease obligations$8,828 $4,584 
Long-term finance lease obligations10,775 2,954 
Total finance lease liabilities$19,603 $7,538 
Operating and finance lease costs were as follows for the years ended December 31, 202031:
20202019
Lease CostClassification2021(Recast)(Recast)
Operating lease cost:
Fixed lease costCost of goods sold$7,011 $6,557 $9,913 
Selling, general, administrative, and development expenses7,820 4,916 — 
Variable lease costCost of goods sold18 28 67 
Selling, general, administrative, and development expenses— 268 — 
Short-term lease costCost of goods sold8,104 9,216 9,121 
Selling, general, administrative, and development expenses528 187 — 
Total operating lease costs$23,481 $21,172 $19,101 
Finance lease cost:
Amortization of leased assetsDepreciation and amortization$10,574 $8,165 $5,220 
Variable lease costCost of goods sold58 254 16 
Selling, general, administrative, and development expenses— 231 — 
Interest on lease liabilitiesInterest expense528 651 472 
Total finance lease costs$11,160 $9,301 $5,708 
Total lease costs$34,641 $30,473 $24,809 
Operating and 2019:
Lease CostClassification20202019
Operating lease cost:
Fixed lease costCost of goods sold$5,806 $4,814 
Variable lease costCost of goods sold28 16 
Short-term lease costCost of goods sold8,421 7,309 
Total operating lease costs$14,255 $12,139 
Finance lease cost:
Amortization of leased assetsDepreciation and amortization7,498 4,159 
Variable lease costCost of goods sold254 
Interest on lease liabilitiesInterest expense490 292 
Total finance lease costs$8,242 $4,460 
Total lease costs$22,497 $16,599 
We are party to afinance lease agreement with North Carolina State Ports Authority (“NCSPA”) to lease certain real property at NCSPA’s Wilmington, North Carolina marine terminalcash flow information was as follows for the Wilmington terminal. The lease has a 21-year term, 2 five-year renewal options and annual base rent of $0.2 million that is payable monthly or annually, subject to a minimum annual throughput fee of $1.9 million for 1.0 million tons annually, subject to increases for throughput above 1.0 million tons annually and an annual increase in producer’s price index up to 1% for industrial commodities less fuel. No payments are due until September 2021. Total estimated payments over the life of the lease are approximately $71.7 million. Operating lease expense related to the lease was $2.3 million for each of the years ended December 31:
20202019
2021(Recast)(Recast)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$7,509 $10,912 $9,917 
Operating cash flows from finance leases524 651 472 
Financing cash flows from finance leases10,688 8,334 4,305 
Assets obtained in exchange for lease obligations:
Operating leases$10,491 $55,784 $17,510 
Finance leases8,531 14,698 8,253 
As of December 31, 2020, 20192021, the future minimum lease payments and 2018.
Depreciation expense relating to assets held underthe aggregate maturities of operating and finance lease obligations was $1.8 million for the year ended December 31, 2018.liabilities are as follows:
Years Ending December 31,Operating
Leases
Finance
Leases
Total
2022$13,382 $8,445 $21,827 
202316,116 4,683 20,799 
202415,545 1,854 17,399 
202515,727 1,405 17,132 
202615,373 1,012 16,385 
Thereafter135,422 2,018 137,440 
Total lease payments211,565 19,417 230,982 
Less: imputed interest(81,126)(985)(82,111)
Total present value of lease liabilities$130,439 $18,432 $148,871 
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Operating and finance lease cash flow information was as follows for the years ended December 31, 2020 and 2019:
20202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$5,828 $4,826 
Operating cash flows from finance leases490 292 
Financing cash flows from finance leases5,571 3,304 
Assets obtained in exchange for lease obligations:
Operating leases$21,561 $7,465 
Finance leases12,487 6,493 
The future minimum lease payments and the aggregate maturities of operating and finance lease liabilities are as follows asAs of December 31, 2020:
Years Ending December 31,Operating
Leases
Finance
Leases
Total
2021$6,726 $9,232 $15,958 
20226,466 5,084 11,550 
20236,365 2,304 8,669 
20246,190 896 7,086 
20256,184 608 6,792 
Thereafter66,570 2,529 69,099 
Total lease payments98,501 20,653 119,154 
Less: imputed interest(44,977)(1,050)(46,027)
Total present value of lease liabilities$53,524 $19,603 $73,127 
The2021, the weighted-average remaining lease terms and discount rates for our operating and finance leases were weighted using the undiscounted future minimum lease payments and are as follows as of December 31, 2020:follows:
Weighted average remaining lease term (years):
Operating leases1715
Finance leases4
Weighted average discount rate:
Operating leases7%6%
Finance leases3%
(11)(10) Derivative Instruments
We use derivative instruments to partially offset our business exposure to foreign currency exchange and interest rate risk. We may enter into foreign currency forward and option contracts to offset some of the foreign currency exchange risk onfrom expected future cash flows and interest rate swaps to offset some of the interest rate risk on expected future cash flows onresulting from certain borrowings. TheAlthough the preponderance of our off-take contracts are U.S. Dollar-denominated. WeDollar-denominated, we are primarily exposed to fluctuations in foreign currency exchange rates related to a minority of our off-take contracts that require future deliveries of wood pellets to be settled in British Pound Sterling (“GBP”) and Euro (“EUR”). Our derivative instruments expose us to credit risk to the extent that hedge counterparties may be unable to meet the terms of the applicable derivative instrument.
We seek to mitigate such risksthe credit risk associated with derivative instruments by limiting our counterparties to major financial institutions. In addition,Although we monitor the potential risk of loss with any one counterparty resulting fromdue to credit risk. Management doesrisk, we do not expect material losses as a result of defaults by counterparties. We use derivative instruments to manage cash flow and do not enter into derivative instruments for speculative or trading purposes.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

We have entered and may continue to enter into foreign currency forward contracts, purchased option contracts or other instruments to partially manage this risk and, priorrisk. Prior to August 2018, hadwe designated certain of thesederivative instruments as cash flow hedges. In August 2018, due to market changes, increases in demand for wood pellets and requests from customers to accommodate the acceleration or deferral of contracted deliveries, we determined that it was not probable that the timing of the forecasted revenues associated with the hedged transactions would occur as originally scheduled. As a result, we discontinued hedge accounting for all designated foreign currency cash flow hedges and recognized the full amount of unrealized net gains included in accumulated other comprehensive income of $1.9 million in earnings. Since August 2018, none of our foreign currency derivative instruments have been designated as cash flow hedging instruments.hedges. In connection with the discontinuation of cash flow hedge accounting, we have recorded the on-going changes in the fair value of foreign currency derivatives as product sales or cost of goods sold depending on the nature of the item being hedged.
During the year ended December 31,In 2020, we entered into pay-fixed, receive-variable interest rate swaps that expire in September 2021 and October 2021 to hedge interest rate risk associated with our variable rate borrowings under our senior secured revolving credit facility that are not designated and accounted for as cash flow hedges. The interest rate swaps expired in 2021.
Derivative instruments are classified as Level 2 assets or liabilities based on inputs such as spot and forward benchmark interest rates (such as LIBOR) and foreign exchange rates. The fair value of derivative instruments as of December 31, 20202021 and 20192020 was as follows:
Asset (Liability)
Balance Sheet Classification20202019
Designated as hedging instruments:
Interest rate swapPrepaid and other current assets$$56 
Total derivatives designated as hedging instruments$$56 
Not designated as hedging instruments:
Interest rate swapsAccrued and other current liabilities$(119)$
Foreign currency exchange contracts:
Prepaid and other current assets$308 $408 
Other long-term assets924 1,774 
Accrued and other current liabilities(2,224)(735)
Other long-term liabilities(3,508)(1,055)
Total derivatives not designated as hedging instruments$(4,619)$392 
Unrealized losses related to the change in fair market value of interest rate swaps are recorded in interest expense and were $0.2 million for the year ended December 31, 2020. Our interest rate swap outstanding during the year ended December 31, 2019 was designated as a hedging instrument.
Asset (Liability)
2020
Balance Sheet Classification2021(Recast)
Not designated as hedging instruments:
Interest rate swapsAccrued and other current liabilities$— $(119)
Foreign currency exchange contracts:
Prepaid expenses and other current assets$321 $308 
Other long-term assets309 924 
Accrued and other current liabilities(1,456)(2,224)
Other long-term liabilities(1,001)(3,508)
Total derivatives not designated as hedging instruments$(1,827)$(4,619)
Net unrealized losses relatedand net realized gains and (losses) recorded to the change of fair market value of foreign currency derivative instruments not designatedearnings were as hedging instruments were $4.3 million and $4.6 million during the years ended December 31, 2020 and 2019, respectively and are included in product sales on the consolidated statements of operations.
During the year ended December 31, 2018, we recorded a net unrealized gain of $8.6 million related to changes in the fair value of foreign currency instruments not designated as hedging instruments, of which $8.4 million was included in product sales and $0.2 million was included in cost of goods sold on the consolidated statements of operations. Included in the unrealized net gains for the year ended December 31, 2018 was $1.9 million related to the reclassification of unrealized net gains previously included in accumulated other comprehensive income as described above.
Realized gains related to foreign currency derivatives settled were $0.3 million, $1.7 million and $4.6 million, respectively, during the years ended December 31, 2020, 2019 and 2018 and are included in product sales on the consolidated statements of operations.follows:
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
20202019
ClassificationDerivative Instrument2021(Recast)(Recast)
Product salesForeign currency derivativesUnrealized$2,673 $(4,327)$(4,588)
Product salesForeign currency derivativesRealized(2,689)275 1,664 
Interest expense
Interest rate swap (1)
Unrealized119 (167)— 

(1)
Our interest rate swap outstanding during the year ended December 31, 2019 was designated as a hedging instrument.
The effects of instruments designated as cash flow hedges and the related changes in accumulated other comprehensive income and the gains and losses recognized in earnings for the year ended December 31, 2019 were as follows:
Amount of Gain
(Loss) in Other
Comprehensive
Income on
Derivative
(Effective Portion)
Location of
Gain (Loss)
Reclassified from
Accumulated Other
Comprehensive
Income
(Effective Portion)
Amount of
Gain (Loss)
Reclassified from
Accumulated Other
Comprehensive
Income
into Income
(Effective Portion)
Interest rate swap$(146)Interest expense$288 
Amount of Gain (Loss) in Other Comprehensive Income on Derivative (Effective Portion)Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Effective Portion)Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)
(Recast)(Recast)
Interest rate swap$(146)Interest expense$288 
We enter into master netting arrangements designed to permit net settlement of derivative transactions among the respective counterparties. If we had settled all transactions with our respective counterparties at December 31, 2020,2021, we would have received a net settlement termination payment of $4.8$1.6 million, which differs by $0.2 million from the recorded fair value of the derivatives. We present our derivative assets and liabilities at their gross fair values.
The notional amounts of outstanding derivative instruments associated with outstanding or unsettled derivative instruments were as of follows as of December 31, 2020 and 2019 were as follows:31:
2020
202020192021(Recast)
Foreign exchange forward contracts in GBPForeign exchange forward contracts in GBP£143,565 £50,575 Foreign exchange forward contracts in GBP£57,500 £143,565 
Foreign exchange purchased option contracts in GBPForeign exchange purchased option contracts in GBP£51,601 £43,415 Foreign exchange purchased option contracts in GBP£7,275 £51,601 
Foreign exchange forward contracts in EURForeign exchange forward contracts in EUR12,968 Foreign exchange forward contracts in EUR11,000 12,968 
Foreign exchange purchased option contracts in EUR1,200 
Interest rate swapsInterest rate swaps$70,000 $34,354 Interest rate swaps$— $70,000 
(12)(11) Fair Value Measurements
The amounts reported in the consolidated balance sheets as cash and cash equivalents, restricted cash, accounts receivable, other accounts receivable, prepaid expenses and other current assets, related-party receivables, net, accounts payable, related-party payables, net, deferred consideration due to related-party and accrued and other current liabilities approximate fair value because of the short-term nature of these instruments.
Derivative instruments and long-term debt including the current portion are classified as Level 2 instruments. Derivatives are classified as Level 2 as they are fair valued using inputs that are observable in active markets such as benchmark interest rates and foreign exchange rates (see Note 11,10, Derivative Instruments). The fair value of our 2026 Notes (see Note 14, Long-Term Debt and Finance Lease Obligations) was determined based on observable market prices in an active market and was categorized as Level 2 in the fair value hierarchy. The fair value of the Seller Note is classified as Level 2 and is estimated on discounted cash flow analyses based on observable inputs in active markets for debt with similar terms and remaining maturities. The carrying amount of other long-term debt, which is primarily comprised of the senior secured revolving credit facility that resets based on a market rate, approximates fair value.
The carrying amount and estimated fair value of long-term debt as of December 31, 2020 and 2019 was as follows:
December 31, 2020December 31, 2019
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
2026 Notes$746,875 $796,875 $593,476 $644,250 
Seller Note37,571 40,405 
Other long-term debt122,000 122,000 2,006 2,006 
Total long-term debt$906,446 $959,280 $595,482 $646,256 
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

(13)The carrying amount and estimated fair value of long-term debt were as follows as of December 31:
20212020
Carrying AmountFair Value
Carrying AmountFair Value(Recast)(Recast)
2026 Notes$747,399 $777,188 $746,875 $796,875 
Seller Note36,442 38,284 37,571 40,405 
Other long-term debt469,273 469,273 142,359 142,359 
Total long-term debt$1,253,114 $1,284,745 $926,805 $979,639 
(12) Goodwill and Other Intangibles
Goodwill
Goodwill was $99.7$103.9 million and $85.6$99.7 million at December 31, 20202021 and 2019,2020, respectively. Goodwill includes $4.3 million recorded from an acquisition in 2021, $14.0 million recorded associated with the Georgia Biomass Acquisition on July 31,in 2020, see Note 4, Acquisition,. Goodwill includes $80.7 million associated with the acquisition of Cottondale by our sponsor and its contribution of Cottondale to us in 2015, and $4.9 million from acquisitions in 2010. We did not record any impairment losses during the years ended December 31, 2021, 2020, 2019 or 2018.2019.
Intangibles
Intangible assets (liabilities) consisted of the following atas of December 31, 2020:31:
20212020
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying Amount
(Recast)
Accumulated Amortization
(Recast)
Net Carrying Amount
(Recast)
Favorable customer contractsFavorable customer contracts$6,200 $(5,566)$634 Favorable customer contracts$700 $(225)$475 $6,200 $(5,566)$634 
Assembled workforceAssembled workforce1,856 (1,249)607 Assembled workforce1,856 (1,726)130 1,856 (1,249)607 
Unfavorable customer contractUnfavorable customer contract(600)57 (543)Unfavorable customer contract(600)193 (407)(600)57 (543)
Unfavorable shipping contractUnfavorable shipping contract(6,300)485 (5,815)Unfavorable shipping contract(6,300)1,648 (4,652)(6,300)485 (5,815)
Total intangible liabilities, netTotal intangible liabilities, net$1,156 $(6,273)$(5,117)Total intangible liabilities, net$(4,344)$(110)$(4,454)$1,156 $(6,273)$(5,117)
The Greenwood Drop-Down included an intangible asset of assembled workforce. As a result of the Georgia Biomass Acquisition, we recorded intangible assets and liabilities related to favorable off-take contracts that expired in 2020 or expire in December 2024, an unfavorable customer contract that expires in December 2024, and an unfavorable shipping contract that expires in December 2025. During the yearyears ended December 31, 2021, 2020, $5.3and 2019 $(0.7) million, $5.5 million, and $0.7 million respectively, of net amortization expense was included in depreciation and amortization on the consolidated statements of operations.
The estimated aggregate net reduction of amortization expense for the next five years is as follows:
Year Ended December 31,Year Ended December 31,Year Ended December 31,
2021$664 
202220221,010 2022$1,010 
202320231,140 20231,140 
202420241,140 20241,140 
202520251,163 20251,164 
20262026— 
TotalTotal$5,117 Total$4,454 
(13) Accrued and Other Current Liabilities
Accrued and other current liabilities consisted of the following as of December 31:
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

2020
2021(Recast)
Accrued expenses - compensation and benefits$22,758 $25,568 
Accrued expenses - wood pellet purchases and distribution costs34,819 50,648 
Accrued expenses - operating costs and expenses55,463 28,805 
Accrued capital expenditures21,791 22,802 
Other accrued expenses and other current liabilities28,475 19,992 
Accrued and other current liabilities$163,306 $147,815 
(14) Long-Term Debt and Finance Lease Obligations
Long-term debt and finance lease obligations at carrying value consisted of the following at December 31:
202020192020
2026 Notes, net of unamortized discount, premium and debt issuance of $3.1 million and $6.5 million as of December 31, 2020 and 2019, respectively$746,875 $593,476 
2021(Recast)
2026 Notes, net of unamortized discount, premium and debt issuance of $2.6 million and $3.1 million as of December 31, 2021 and 2020, respectively2026 Notes, net of unamortized discount, premium and debt issuance of $2.6 million and $3.1 million as of December 31, 2021 and 2020, respectively$747,399 $746,875 
Senior secured revolving credit facilitySenior secured revolving credit facility120,000 Senior secured revolving credit facility466,000 120,000 
Seller Note, net of unamortized discount of $2.4 million37,571 
Seller Note, net of unamortized discount of $1.1 million and $2.4 million as of December 31, 2021 and 2020, respectivelySeller Note, net of unamortized discount of $1.1 million and $2.4 million as of December 31, 2021 and 2020, respectively36,442 37,571 
Related-party note payableRelated-party note payable— 20,000 
Other loansOther loans2,000 2,006 Other loans3,273 2,359 
Finance leasesFinance leases19,603 7,538 Finance leases18,432 21,244 
Total long-term debt and finance lease obligationsTotal long-term debt and finance lease obligations926,049 603,020 Total long-term debt and finance lease obligations1,271,546 948,049 
Less current portion of long-term debt and finance lease obligations(13,328)(6,590)
Less current portion of long-term debt, finance lease obligations, and related-party note payableLess current portion of long-term debt, finance lease obligations, and related-party note payable(39,105)(34,551)
Long-term debt and finance lease obligations, excluding current installmentsLong-term debt and finance lease obligations, excluding current installments$912,721 $596,430 Long-term debt and finance lease obligations, excluding current installments$1,232,441 $913,498 
2026 Notes
In December 2019, we issued $600.0 million in principal amount of 6.5% senior unsecured notes due January 15, 2026 (the “2026 Notes)Notes”). We received gross proceeds of approximately $601.8 million from the 2026 Notes and net proceeds of approximately $595.8 million after deducting commissions and expenses. We used the net proceeds from the 2026 Notes to (1) redeem our existing $355.0 million principal amount of 8.5% senior unsecured notes due 2021 (the “2021 Notes”), including payment of the related redemption premium, (2) repay borrowings under our senior secured revolving credit facility, including payment of the related accrued interest, and (3) for general partnership purposes.
In July 2020, we issued an additional $150.0 million aggregate principal amount of the 2026 Notes at an offering price of 103.75% of the principal amount (the “Additional Notes”). We received net proceeds of approximately $153.6 million from the Additional Notes offering after deducting discounts and commissions. We used the net proceeds from the Additional Notes offering to fund a portion of the cash consideration for the third-party member of the Development JV’s indirect interest in Enviva Pellets Greenwood Drop-DownHoldings II, LLC (“Greenwood”), and the Georgia Biomass Acquisition, to repay borrowings under our senior secured revolving credit facility and for general partnership purposes.
Interest payments are due semi-annually in arrears on January 15 and July 15 of each year, commencing July 15, 2020. During 2020, we recorded $2.7 million of premium offset by debt issuance costs associated with the Additional Notes. During 2019, we recorded $6.6 million of debt issuance costs, offset by premium associated with the issuance of the 2026 Notes, which have been recorded as a deduction to long-term debt and finance lease obligations.
We may redeem all or a portion of the 2026 Notes at any time at the applicable redemption price, plus accrued and unpaid interest, if any, (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date) and, in some cases, plus a make-whole premium.
As of December 31, 20202021 and 2019,2020, we were in compliance with the covenants and restrictions associated with, and no events of default existed under, the indenture dated as of December 9, 2019 governing the 2026 Notes. The 2026 Notes are
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
guaranteed jointly and severally on a senior unsecured basis by most of our existing subsidiaries (excluding Enviva Partners Finance Corp.) that guarantee certain of our indebtedness and may be guaranteed by certain future restricted subsidiaries.
2021 Notes
In December 2019, we redeemed all $355.0 million of aggregate principal amount of 2021 Notes and recognized a $9.0 million loss on the early retirement of debt obligation consisting of a $7.5 million debt redemption premium and $1.5 million for the write-off of unamortized debt issuance costs, original issue discount and premium. The amounts were amortized over the term of the 2021 Notes and were expensed in December 2019 when we repaid $355.0 million of aggregate principal amount of the 2021 Notes. The 2021 Notes early redemption was funded from the issuance of the 2026 Notes.
Senior Secured Revolving Credit Facility
We have a $350.0 millionIn December 2021, we amended our senior secured revolving credit facility that matures onto increase the revolving credit commitments from $525.0 million to $570.0 million and to permit the issuance of commercial letters of credit. In April 2021, we amended our senior secured revolving credit facility to increase the revolving credit commitments from $350.0 million to $525.0 million, to extend the maturity from October 18, 2023.
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ENVIVA PARTNERS, LP AND SUBSIDIARIES
Notescredit commitment from $50.0 million to Consolidated Financial Statements (Continued)
(In thousands, except number$80.0 million, and to reduce the cost of units, per unit amounts and unless otherwise noted)

borrowing by 25 basis points.
Borrowings under the revolving credit commitments thereunder bear interest, at our option, at either a Eurodollar rate or at a base rate, in each case, plus an applicable margin. The applicable margin will fluctuate between 1.75%1.50% per annum and 3.00%2.75% per annum, in the case of Eurodollar rate borrowings, or between 0.75%0.50% per annum and 2.00%1.75% per annum, in the case of base rate loans, in each case, based on our Total Leverage Ratio (as defined in our credit agreement) at such time, with 25 basis point increases or decreases for each 0.50 increase or decrease in our Total Leverage Ratio from 2.75:1:00 to 4.75:1:00.
We are required to pay a commitment fee on the daily unused amount under the revolving credit commitments at a rate between 0.25% and 0.50% per annum. During the years ended December 31, 2021, 2020 2019 and 2018,2019, commitment fees were $0.8 million, $0.9 million $0.8 million and $0.5$0.8 million, respectively.
At December 31, 2021 and 2020, we had $466.0 million and $120.0 million, respectively, in outstanding borrowings under our senior secured revolving credit facility.
At December 31, 2019,2021 and 2020, we had 0 outstanding borrowings under our senior secured revolving credit facility.
We had a letter$4.2 million and $0.3 million, respectively, of letters of credit outstanding under our senior secured revolving credit facility of $0.3 million at December 31, 2020 and NaN at December 31, 2019.facility.
The credit agreement contains certain covenants, restrictions and events of default. We are required to maintain (1) a maximum Total Leverage Ratio at or below 4.755.00 to 1.00 (or 5.005.25 to 1.00 during a Material Transaction Period) and (2) a minimum Interest Coverage Ratio (as defined in our credit agreement) of not less than 2.25 to 1.00.
As of December 31, 20202021 and 2019,2020, we were in compliance with all covenants and restrictions associated with, and no events of default existed under, our senior secured revolving credit facility. Our obligations under the senior secured revolving credit facility are guaranteed by certain of our subsidiaries and secured by liens on substantially all of our assets; however, the senior secured revolving credit facility is not guaranteed by the Hamlet JV or Enviva Pellets Epes, LLC, or secured by liens on itstheir assets.
Seller Note
In connection with the Greenwood Drop-Down, we becameWe are a party to, and a guarantor of, a promissory note (the “Seller Note”) with a remaining principal balance of $40.0 million, which was initially recorded at its carrying value of $36.9$37.5 million. The Seller Note matures in February 2023 and has an interest rate of 2.5% per annum. Principal and related interest payments are due annually through February 2022 and quarterly thereafter.
Debt Issuance CostsSenior Secured Green Term Loan Facility
In February 2021, our former sponsor entered into a senior secured green term loan facility (the “Green Term Loan”) providing for $325.0 million principal amount, maturing in February 2026. Interest was priced LIBOR plus 5.50% with a LIBOR floor of 1.00%. Interest was payable in arrears at the end of each interest period and Premium
Unamortized debt issuance costs and premium included in long-term debt at December 31, 2020 and 2019 were $5.5 million and $6.5 million, respectively. Unamortized debt issuance costs associated withon the revolving credit facility included in long-term assets was $1.5 million and $2.0 million at December 31, 2020 and 2019, respectively. Amortization expense included inmaturity date. Subject to our former sponsor’s election, interest expense for the years ended December 31, 2020, 2019 and 2018 was $1.9 million, $1.2 million and $1.1 million, respectively.periods of one, two, three, or six months. Our former sponsor received gross proceeds of $325.0
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

million and net proceeds of approximately $317.2 million after deducting original issue discount, commissions, and expenses. Our former sponsor used the net proceeds (1) to purchase the Development JV third-party member’s interest in the Development JV, (2) to repay the Riverstone Loan (see Note 15,
Related-Party Transactions), (3) to fund capital expenditure and liquidity reserve cash accounts, and (4) for general purposes. During 2021, our former sponsor repaid $338.7 million of principal amount plus accrued interest. The Green Term Loan was repaid in full during 2021 and no further borrowings are available under the facility.
Debt Issuance Costs and Premium
Unamortized debt issuance costs and premium included in long-term debt at December 31, 2021 and 2020 were $3.7 million and $5.5 million, respectively. Unamortized debt issuance costs associated with the senior secured revolving credit facility included in long-term assets was $2.8 million and $1.5 million at December 31, 2021 and 2020, respectively. Amortization expense included in interest expense for the years ended December 31, 2021, 2020, and 2019 was $3.9 million, $2.6 million, and $2.6 million, respectively.
Debt Maturities
Our long-term debt matures through 2026 and our finance lease obligations have maturity dates of between 2021 and 2031. The aggregate maturities of long-term debt and finance lease obligations as of December 31, 20202021 are as follows:
Year Ending December 31:Year Ending December 31:Year Ending December 31:
2021$13,328 
2022202233,623 2022$39,105 
20232023130,920 202313,461 
20242024808 20241,973 
2025 and thereafter752,924 
202520251,581 
2026 and thereafter2026 and thereafter1,219,085 
Long-term debt and finance lease obligationsLong-term debt and finance lease obligations931,603 Long-term debt and finance lease obligations1,275,205 
Unamortized premium and debt issuance costsUnamortized premium and debt issuance costs(5,554)Unamortized premium and debt issuance costs(3,659)
Total long-term debt and finance lease obligationsTotal long-term debt and finance lease obligations$926,049 Total long-term debt and finance lease obligations$1,271,546 

(15) Related-Party Transactions
Related-party amountsRiverstone/Carlyle Renewable and Alternative Energy Fund II, L.P. and certain affiliated entities (the “Riverstone Funds”), were the sole members of our former general partner. On July 22, 2020, Holdings was recapitalized (the “Recapitalization”) and Riverstone Echo Continuation Holdings, L.P. (the “Continuation Fund”) and Riverstone Echo Rollover Holdings, L.P. (the “Rollover Fund”) became the sole members of the general partner of our former sponsor.
Our former sponsor incurred an annual monitoring fee, which was paid quarterly to the Riverstone Funds, equal to 0.4% of the average value of the Riverstone Funds’ capital contributions to our former sponsor during each fiscal quarter. We incurred $1.1 million, $1.2 million and $1.1 million of monitoring fee expense during the years ended December 31, 2021, 2020 and 2019, respectively, which is included in selling, general, administrative, and development expenses. As of December 31, 2021 and 2020, we had an insignificant amount and $0.5 million payable related to related-party monitoring fee expense included in accrued and other current liabilities. The monitoring fee was terminated on the consolidated statementsdate of operationsthe Simplification Transaction.
In November 2020, our former sponsor entered into a promissory note with the Continuation Fund and the Rollover Fund for principal amount of $20.0 million (the “Riverstone Loan”). The proceeds of the Riverstone Loan were as follows:
For the Year Ended December 31,202020192018
Other revenue$1,264 $1,789 $3,545 
Cost of goods sold125,284 111,491 84,148 
General and administrative expenses(1)
32,545 29,457 21,762 
used (1) Includes $10.3to fund a capital call of $15.0 million $5.0to the Development JV, (2) to purchase a project site in the amount of $2.6 million to develop a wood pellet production plant in Epes, Alabama, and $4.7(3) for general purposes. In February 2021, our former sponsor repaid $20.1 million of expense related to Affiliate Grantsprincipal amount plus accrued interest.
Management Services Agreements
Enviva Partners, LP and the Hamlet JV are parties to MSAs with Enviva Management Company. Enviva Management Company provides us with operations, general administrative, management and other services. We reimburse Enviva Management Company for all direct or indirect internal or third-party expenses it incurs in connection with the provision of such services. The MSAs include rent-related amounts for noncancelable operating leases for office space in Maryland and North Carolina held byOn October 14, 2021, our sponsor. We believe the costs allocated to us have been made on a reasonable basis and are the best estimateformer sponsor distributed 13.6 million common units of the costs that we would have incurred on a stand-alone basis.
Under the Hamlet JV’s MSA (the “Hamlet JV MSA”), the Hamlet JV pays an annual management fee to Enviva Management Company;Partnership to the extent allocated costs exceedRiverstone Funds. As part of the annual management fee,16.0 million common units issued in exchange for the additional costs are recorded with an increaseSimplification Transaction, 14.1 million were issued to partners’ capital. In connection with the Hamlet Drop-Down, Enviva Management Company waived the Hamlet JV’s obligationRiverstone Funds. The Riverstone Funds have agreed to pay approximately $2.7reinvest in our common stock all dividends from 8.7 million of management fees payable to Enviva Management Company from the date thereof until July 1, 2020 (the “Hamlet JV MSA Fee Waiver”).
Related-party amounts included on the consolidated balance sheets under our MSAs were as follows:
As of December 31,20202019
Finished goods inventory$907 $419 
Related-party payables8,650 18,703 
Related-party amounts included on the consolidated statements of operations under our MSAs were as follows:
For the Year Ended December 31,202020192018
Cost of goods sold$74,475 $63,377 $52,280 
General and administrative expenses32,545 29,457 21,762 
14.1
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Duringmillion common units issued in connection with the Simplification Transaction for the dividends paid for the period beginning with the third quarter of 2021 through the fourth quarter of 2024. On the date of the Simplification Transaction, the Riverstone Funds held 27.7 million common units.
In connection with the Simplification Transaction, our existing management fee waivers and other former sponsor support agreements associated with our earlier common control acquisitions were consolidated, fixed, and novated to certain of the former owners of our former sponsor. As a result, under the consolidated support agreement, we will receive quarterly payments in an aggregate amount of $55.5 million with respect to periods through the fourth quarter of 2023.
(16) Income Taxes
As a result of the Conversion, Enviva became subject to U.S. federal, foreign, and state, and local corporate income tax.
In the Conversion, Enviva recognized a step-up in the tax basis of certain assets that will be recovered as the assets are sold or the basis is amortized. The calculation and allocation of the step-up in tax basis to the various assets of the Company was determined by management with the assistance of a third-party specialist. The basis information used was based on an estimate of the basis in Enviva Inc. as of December 31, 2021. Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the applicable enacted tax rates and laws that will be in effect when such differences are expected to reverse. The final amount of the step-up in tax basis may differ as basis information, including the partnerships’ tax basis in underlying assets and liabilities based on 2021 tax return information, becomes available and is finalized. Enviva assessed the realizability of the deferred tax assets (“DTAs”) and concluded that a full valuation allowance for the net DTAs is deemed appropriate as the DTAs were not more likely than not to be realized under relevant accounting standards. On the date of the Conversion, we recorded an estimated net deferred tax asset of $142.8 million relating to the Conversion with a full valuation allowance, resulting in a net zero deferred tax benefit for the deferred taxes relating to the Conversion.
Enviva included income tax benefit of $17.0 million in the consolidated statement of operations for the year ended December 31, 2021 as it related to the activities of corporate subsidiaries and Conversion to corporation. For tax years ended December 31, 2020 and 2019, $1.9we recorded income tax expense of $0.2 million and $2.6 million, respectively,income tax benefit of fees expensed under the Hamlet JV MSA were waived and recorded as an increase to partners’ capital.$2.0 million.
Drop-Down Agreements
Greenwood Drop-Down
Pursuant to the Third EVA MSA Fee Waiver, during the year ended December 31, 2020, $18.0 million was recorded as an increase to partners’ capital consisting of expenses waived under the agreement.
Hamlet Drop-Down
On the dateLoss before income taxes consists of the Hamlet Drop-Down:following:
We entered into an agreement with our sponsor, pursuant to which (1) our sponsor agreed to guarantee certain cash flows from the Hamlet plant until June 30, 2020, (2) our sponsor agreed to reimburse us for construction cost overruns in excess of budgeted capital expenditures for the Hamlet plant, subject to certain exceptions, (3) we agreed to pay to our sponsor quarterly incentive payments for any wood pellets produced by the Hamlet plant in excess of forecast production levels through June 30, 2020 and (4) our sponsor agreed to retain liability for certain claims payable, if any, by the Hamlet JV (the “Hamlet Make-Whole Agreement”).
We entered into an agreement with Enviva Management Company to waive our obligation to pay an aggregate of approximately $13.0 million in fees payable under our MSA with Enviva Management Company (the “EVA MSA”) with respect to the period from the date of the Hamlet Drop-Down through the second quarter of 2020 (the “First EVA MSA Fee Waiver”).
The Hamlet JV entered into an interim services agreement (the “ISA”) with Enviva Hamlet Operator, LLC, a wholly owned subsidiary of our sponsor (“Hamlet Operator”), pursuant to which Hamlet Operator, as an independent contractor, agreed to manage, operate, maintain and repair the Hamlet plant and provide other services to the Hamlet JV for the period from July 1, 2019 through June 30, 2020 in exchange for a fixed fee per MT of wood pellets produced by the Hamlet plant during such period and delivered at place to the Wilmington terminal. Under and during the term of the ISA, Hamlet Operator agreed to (1) pay all operating and maintenance expenses at the Hamlet plant, (2) cover all reimbursable general and administrative expenses associated with the Hamlet plant and (3) pay other costs and expenses incurred by the Hamlet plant to produce and sell the wood pellets delivered to the Wilmington terminal from the Hamlet plant. Our sponsor guaranteed all obligations of Hamlet Operator under the ISA.
During the year ended December 31, 2020, $3.5 million was recorded as an increase to partners’ capital consisting of expenses waived under the First EVA MSA Fee Waiver. Cost of goods sold included $25.2 million net of a cost of cover deficiency fee from our sponsor pursuant to the Hamlet Make-Whole Agreement as a result of Hamlet Operator’s failure to meet specified production levels, offset by the agreed-upon price due to Hamlet Operator for the wood pellets produced by the Hamlet plant that we sold. As of December 31, 2020, included in related-party receivables, net are $12.3 million related to the ISA. The Hamlet Make-Whole Agreement, First EVA MSA Waiver and ISA expired pursuant to their terms on June 30, 2020.
During the year ended December 31, 2019, $19.7 million was recorded as an increase to partners’ capital and $7.7 million was recorded in cost of goods sold pursuant to the agreements we entered into on the date of acquisition of the Hamlet JV. The increases to partners’ capital are comprised of expenses waived under the First EVA MSA Fee Waiver and the Hamlet JV MSA Fee Waiver and reimbursement of construction cost overruns in excess of budgeted capital expenditures for the Hamlet plant. The net reduction in cost of goods sold comprises our receipt of a cost of cover deficiency fee from our sponsor pursuant to the Make-Whole Agreement as a result of Hamlet Operator’s failure to meet specified production levels, offset by the agreed-upon price due to Hamlet Operator for the pellets produced by the Hamlet plant that we have sold.
Hamlet JV Revolver
Our sponsor assigned to us all of its rights and obligations under the amended and restated credit agreement, dated as of June 30, 2018, between the Hamlet JV, as borrower, and our sponsor, as lender. On April 2, 2019, we amended and restated the Hamlet JV Revolver to extend the maturity date of the revolving loans made to the Hamlet JV and increase our commitment as lender to fund increases in the amount of such loans from $30.0 million to $60.0 million in order to fund capital expenditures and working capital at the Hamlet plant. As of December 31, 2020 and 2019, the outstanding balance of the Hamlet JV Revolver was
20202019
2021(Recast)(Recast)
U.S.$(162,246)$(106,155)$(136,916)
Foreign421 81 54 
Net loss not subject to federal income tax145,040 102,603 129,288 
Loss before income tax$(16,785)$(3,471)$(7,574)
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

$41.7 millionComponents of the income tax provision applicable to our federal, state and $52.2 million, respectively, dueforeign taxes are as follows:
20202019
2021(Recast)(Recast)
Current income tax expense :
Federal$4,593 $— $— 
State— 
Foreign55 86 42 
Total current income tax expense$4,653 $86 $43 
Deferred income tax (benefit) expense:
Federal$(21,570)$82 $(1,996)
State(58)(1)
Total deferred income tax (benefit) expense$(21,628)$83 $(1,997)
Total income tax (benefit) expense$(16,975)$169 $(1,954)
The effective income tax rate from continuing operations varies from the Hamlet JV to Enviva, LP, both of which are eliminated upon consolidation.
Second EVA MSA Fee Waiver
In June 2019, we entered into an additional agreement with Enviva Management Company (the “Second EVA MSA Fee Waiver”) pursuant to which we received a $5.0 million waiver of fees under the EVA MSA through September 30, 2019 as consideration for an assignment of two shipping contracts to our sponsor to rebalance our and our sponsor’s respective shipping obligations under our existing off-take contracts. During the year ended December 31, 2019, $5.0 million of fees expensed under the EVA MSA were waived and recorded as an increase to partners’ capital pursuantU.S. Federal statutory rate principally due to the Second EVA MSA Fee Waiver.following:
Wilmington Drop-Down - Second Payment
In October 2017, we purchased all of the issued and outstanding limited liability company interests in Enviva Port of Wilmington, LLC (“Wilmington”) for total consideration of $130.0 million (the “Wilmington Drop-Down”). On April 1, 2019, we made the second and final payment of $74.0 million, which consisted of $24.3 million in cash, of which $22.8 million was distributed to John Hancock, and the issuance of 1,691,627 common units, or approximately $49.7 million in common units, which were distributed to John Hancock.
Greenwood Contract
We were party to a contract with Greenwood to purchase wood pellets produced by the Greenwood plant through March 2022 (the “Greenwood Contract”) and had a take-or-pay obligation with respect to 550,000 MTPY of wood pellets from July 2019 through March 2022 subject to Greenwood’s option to increase or decrease the volume by 10% each contract year. Pursuant to an amendment to the Greenwood Contract, our take-or-pay obligation with respect to 550,000 MTPY of wood pellets was deferred to 2021. The Greenwood Contract was terminated on the date of the Greenwood Drop-Down.
During the years ended December 31, 2020, 2019 and 2018, we purchased $18.8 million, $46.2 million and $27.4 million, respectively, of wood pellets from Greenwood and recorded a cost of cover deficiency fee of approximately $0.3 million, $5.0 million and $0.7 million, respectively, as Greenwood was unable to satisfy certain commitments.
As of December 31, 2020, the net purchased amount of $18.1 million related to the Greenwood contract was included in cost of goods sold and there was no finished good inventory. As of December 31, 2019 and 2018, of the net $41.2 million and $26.7 million, $40.9 million and $26.2 million is included in cost of goods sold, and $0.3 million and $0.5 million is included in finished goods inventory, respectively.
As of December 31, 2020, there were 0 related-party payables related to our wood pellet purchases from Greenwood. As of December 31, 2019, $1.3 million is included in related-party payables related to our wood pellet purchases from Greenwood.
Holdings TSA
Prior to its termination on the date of the Greenwood Drop-Down, we were party to a long-term terminal services agreement with our sponsor (the “Holdings TSA”). Pursuant to the Holdings TSA, our sponsor agreed to deliver a minimum of 125,000 MT of wood pellets per quarter for receipt, storage, handling and loading services by the Wilmington terminal and pay a fixed fee on a per-ton basis for such terminal services. During the years ended December 31, 2020 and 2019, we recorded 0 terminal services revenue from our sponsor. During the year ended December 31, 2018, we recorded $0.8 million as terminal services revenue from our sponsor, which is included in other revenue.
In 2018, the Holdings TSA was amended and assigned to Greenwood and provided for deficiency payments to Wilmington if quarterly minimum throughput requirements were not met. During the years ended December 31, 2020, 2019 and 2018, we recorded $1.3 million, $1.8 million and $2.2 million, respectively, of deficiency fees from Greenwood, which is included in other revenue.
Additionally, in 2018, Hurricane Florence impacted the rail line on which wood pellets are typically transported from the Greenwood plant to the Wilmington terminal. As a result, Greenwood was unable to satisfy certain commitments under the Holdings TSA and the Greenwood Contract and agreed to pay $1.8 million to us as deficiency fees in consideration of these commitments. Consideration of $0.5 million related to the Holdings TSA was included in other revenue and $1.3 million related to the Greenwood contract was included as a reduction of cost of goods sold during the year ended December 31, 2018.
20202019
2021(Recast)(Recast)
Income tax (benefit) expense at statutory federal income tax rate$(34,072)$(22,293)$(28,752)
Increase (decrease) in income taxes resulting from:
Partnership earnings not subject to tax30,547 21,564 27,162 
Recognition/derecognition of deferred tax(155,980)— — 
Valuation allowance142,822 — — 
Other(292)898 (364)
Total income tax (benefit) expense$(16,975)$169 $(1,954)
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Enviva FiberCo, LLC
We purchase raw materials from Enviva FiberCo, LLC (“FiberCo”), a wholly owned subsidiarySignificant components of our sponsor, including through a wood supply agreement that provided for deficiency fees in the event FiberCo did not satisfy certain volume commitments. Purchased raw materials net of cost of cover deficiency fees are included in cost of goods sold. Raw materials purchased during the year ended December 31, 2020 were $7.5 million. NaN cost of cover deficiency fees were recognized during the year ended December 31, 2020. During the year ended December 31, 2019, cost of cover deficiency fees net of raw material purchases were $0.5 million. During the year ended December 31, 2018, raw material purchases were $7.1 million. There were 0 cost of cover deficiency fees during the year ended December 31, 2018. As of December 31, 2020, $0.3 million is included in related-party payables related to raw materials purchased from FiberCo. There was 0 amount in related-party payables related to raw materials purchased from FiberCodeferred tax assets and liabilities as of December 31, 2019.
Equipment Transfer
In April 2020, Enviva Pellets Northampton, LLC sold certain equipment to the sponsor for approximately $4.1 million.
Biomass Option Agreement – Enviva Holdings, LP
In February 2017, Enviva, LP entered into an agreement and a confirmation thereunder with our sponsor (together, as amended, the “Option Contract”).
During the year ended December 31, 2018, Enviva, LP purchased $1.7 million of wood pellets from our sponsor. The Option Contract terminated in accordance with its terms in March 2018.
(16) Income Taxes
Our consolidated statement of operations for the year ended December 31, 2020 included income tax expense of $0.1 million. For the years ended December 31, 2019 and 2018, 0 provision for income tax was recorded in the consolidated financial statements.
Components of the income tax provision applicable to our federal and state taxes2021 are as follows:
2020
Deferred income tax expense:
U.S. Federal$69 
Total deferred$69 
Total income tax expense related to continuing operations$69 
The effective income tax rate from continuing operations varies from the U.S. Federal statutory rate principally due to the following:
2020
Income taxes at statutory federal income tax rate$3,601 
Increase (decrease) in income taxes resulting from:
Partnership earnings not subject to tax(3,671)
Other139 
Total income tax expense$69 
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Deferred tax assets and liabilities result from the following:
2020
Deferred tax assets:
Net operating loss carryforward$3,611 
Total deferred tax assets$3,611 
Deferred tax liabilities:
Investment in affiliates$(16,828)
Total deferred tax liabilities$(16,828)
Net deferred tax assets (liabilities)$(13,217)
2020
2021(Recast)
Deferred tax assets:
Federal net operating loss carryforward$1,033 $9,730 
Accrued bonus and other accrued liabilities2,874 — 
Operating lease liabilities27,906 — 
Mark to market derivatives391 — 
Equity based compensation10,681 — 
Property, plant and equipment122,988 — 
Interest expense limitation— 2,328 
Intangibles953 — 
Total deferred tax assets$166,826 $12,058 
Deferred tax liabilities:
Prepaids$(548)$— 
Operating lease right-of-use assets(23,286)— 
Investment in affiliates— (35,202)
Other(206)(36)
Total deferred tax liabilities(24,040)(35,238)
Valuation allowance(142,822)(2,038)
Net deferred tax liability net valuation allowance$(36)$(25,218)
As of December 31, 2020,2021, we have federal net operating loss carryforwards of approximately $17.2$4.8 million, expiringout of which $3.6 million will expire in years 20332034 to 2036.
For calendar year 2020,2021, the only periods subject to examination for U.S. federal and state income tax returns are 20172018 through 2019.2020. We believe our income tax filing positions, including our previous status as a pass-through entity, would be sustained on audit and do not anticipate any adjustments that would result in a material change to our consolidated balance sheet. Therefore, 0no reserves for uncertain tax positions or interest and penalties have been recorded during the years ended December 31, 2021, 2020, 2019 and 2018.2019.
Assessing whether deferred tax assets are realizable requires significant judgement. Enviva considers all available positive and negative evidence, including historical operating performance and expectations of future operating performance. The ultimate realization of deferred tax assets is often dependent upon future taxable income and therefore can be uncertain. To the extent that Enviva believes it is more likely than not that all or some portion of the asset will not be realized, valuation allowances are established against any deferred tax assets, which increases income tax expense in the period when such a determination is made. Enviva assessed the realizability of the DTAs and concluded that a full valuation allowance for the net DTAs is deemed appropriate as the DTAs were not more likely than not to be realized under relevant accounting standards.
The Company conducts its foreign operations through foreign taxable entities and is therefore subject to foreign income taxes. The Company generally has minimal foreign current and deferred income tax expense.
(17) Partners’ CapitalEquity
Common Units - IssuanceConversion
In June 2020, we issued 6,153,846As a result of the Conversion, periods prior to December 31, 2021 reflect Enviva as a limited partnership, not a corporation. References to common units in a private placement at a price of $32.50 per common unit for gross proceeds of $200.0 million. We received proceeds of $190.5 million, net of $9.5 million of issuance costs.
In March 2019, we issued 3,508,778periods prior to the Conversion refer to common units in a registered direct offering for net proceeds of approximately $97.0 million, net of $3.0 million of issuance costs. On April 1, 2019, in connection with the Second Payment for the Wilmington Drop-Down, we issued 1,691,627 common units, or $49.7 million in common units, to the Hamlet JV, which common units were distributed to John Hancock.
Common Units - Sponsor
In January 2018, our sponsor sold to our general partner 81,708 common units, which were used to satisfy our obligation to settle vested performance-based phantom unit awards granted under the LTIP. On May 9, 2018, our sponsor sold to third parties all of the 1,265,453 common units held by our sponsor on such date. All of our subordinated units, which at the time were held by our sponsor, converted into common units on a 1-for-one basis at the end of the subordination period on May 30, 2018. As of December 31, 2018, 11,905,138 common units were held by our sponsor. On April 2, 2019, in connection with the Hamlet Drop-Down, we issued 1,681,237 common units, or $50.0 million in common units, to our sponsor.
Shelf Registration - Equity Interests in the Partnership
We filed a shelf registration statement on Form S-3 with the U.S. Securities and Exchange Commission (the “SEC”) on June 21, 2019 to allow us, from time to time, in one or more offerings, to offer and sell (1) common units representing limited partner interests in Enviva Partners, LP, and (2) preferred units representing equity interests inreferences to common stock for periods following the Conversion refer to shares of common stock of Enviva Partners, LP. The aggregate initial offering price of all securities sold by us under the effective shelf registration statement may not exceed $500.0 million.
On April 1, 2019, in connection with the Second Payment for the Wilmington Drop-Down, we issued 1,691,627 common units, or $49.7 million in common units, to the Hamlet JV, which common units were distributed to John Hancock. On April 2, 2019, in connection with the Hamlet Drop-Down, we issued 1,681,237 common units, or $50.0 million in common units, to our sponsor. In accordance with our registration rights agreements with John Hancock, we registered the common units issued for the Wilmington-Drop Down and the Hamlet Drop-Down for resale, subject to certain limitations, pursuant to the effective shelf registration statement.Inc.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
On the date of the Conversion, each common unit representing a limited partner interest in the Partnership issued and outstanding immediately prior to the Conversion was exchanged for one share of common stock of the Company, par value $0.001 per share.
Simplification Transaction

On October 14, 2021, the Partnership closed on the Simplification Transaction where (a) the Company acquired (i) all of the limited partner interests in our former sponsor and (ii) all of the limited liability company interests in the former GP, and (b) the incentive distribution rights directly held by our former sponsor were cancelled and eliminated. In exchange, the Partnership issued 16.0 million common units, which were distributed to the owners of our former sponsor. The owners of our former sponsor agreed to reinvest in our common stock all dividends from 9.0 million of the 16.0 million common units issued in connection with the closingSimplification Transaction during the period beginning with dividends paid for the third quarter of our private placement2021 through the fourth quarter of common units2024. Under a consolidated support agreement, we are entitled to receive quarterly payments (the “Support Payments”) in June 2020, we entered into a registration rights agreement with investors, pursuantan aggregate amount of up to which we agreed to file and maintain a registration statement$55.5 million with respect to periods from the resalefourth quarter of 2021 through the first quarter of 2024. See “Noncontrolling Interests – Enviva Partners” below about the capital of the common units onPartnership.
Recapitalization
On the terms set forth therein. On July 10, 2020, we fileddate of the registration statementRecapitalization and on July 20,as of December 31, 2020, the registration statementcapital of Holdings consisted of a general partner interest and limited partner interests. The general partner interest was declared effective.
At-the-Market Offering Program
Pursuanta non-economic, management interest. The general partner was granted full and complete power and authority to an equity distribution agreement dated August 8, 2016, we may offermanage and sell commonconduct the business and affairs of Holdings and to take all such actions as it deemed necessary or appropriate to accomplish the purpose of Holdings. The limited partner interests were divided into two series of units, from time to time through a groupSeries A units and Series B units. The limited partner interests of managers, subjectSeries A, B and D units issued and outstanding immediately prior to the termsRecapitalization were bought out by holders who received new Series A units, which were issued and conditions set forth in such agreement,outstanding as of the Recapitalization and December 31, 2020. The limited partner interests represented by the preceding Series C and E units were canceled as part of the Recapitalization.
Series A Units
As of the Recapitalization, Series A units were issued to certain continuing investors and to new investors who purchased the interests of preceding investors. Holdings did not receive any contributions or make any distributions as part of the Recapitalization. The general partner had the ability to call on a total of up to an aggregate sales amountapproximately $300.0 million incremental equity commitments to finance future growth projects in exchange for additional units. No amounts were called upon or drawn pursuant to the equity commitment.
Distribution Rights
All distributable property of $100.0 million (the “ATM Program”). During the years ended December 31, 2020 and 2019, we did not sell common units under the ATM Program.Holdings legally available for distribution upon a liquidation event would be distributed as follows:
Allocations of Net Income (Loss)
The Partnership’s partnership agreement contains provisions for the allocation of net income and loss to our unitholders and the General Partner, a wholly owned subsidiary of our sponsor. For purposes of maintaining partner capital accounts, the partnership agreement specifies that items of income and loss shall be allocated among the partners of the Partnership in accordance with their respective percentage ownership interest. Such allocations are made after giving effect, if any, to priority income allocations in an amount equal to incentive cash distributions, which are allocated(a) First: 100% to the General Partner.Series A Limited Partners in proportion to their respective Unreturned Series A Capital Contributions until the Unreturned Series A Capital Contributions of each Series A Limited Partner have been reduced to $0.
(b) Second: 100% to the Series A Limited Partners in proportion to their Unpaid Series A Preference Amounts until the Unpaid Series A Preference Amount of each Series A Limited Partner has been reduced to $0; and
(c) Thereafter: (i) 85% to the Series A Limited Partners in proportion to their respective Series A Unit Sharing Percentages and (ii) 15% to the Series B Limited Partners in proportion to their respective Series B Unit Sharing Percentages.
Previous Capitalization
Prior to the Hamlet Drop-Down, John Hancock had received all of its capital contributions and substantially all of its preference amount andRecapitalization, the historical net losses of the Hamlet JV had been allocated to the members of the Hamlet JV in proportion to their unreturned capital contributions; consequently, the balance of members’partners’ capital attributable to John HancockEnviva Holdings, LP was negative atdivided into five classifications: (1) Series A units, (2) Series B units, (3) Series C units, (4) Series D units and (5) Series E units.
Series A Units
Holdings had previously issued 250.0 million Series A units to the timeprevious Series A limited partners. On the date of the Hamlet Drop-Down. We have notRecapitalization, the previously issued Series A units were bought out by holders who received full repayment of revolving borrowings from the Hamlet JV pursuant to the Hamlet JV Revolver or its capital contributions and full preference amount as of December 31, 2020; as a result, none of the earnings of the Hamlet JV have been allocated to John Hancock following the Hamlet Drop-Down and no change has been recognized to the negative noncontrolling interest balance attributable to John Hancock that we acquired.
Incentive Distribution Rights
Incentive distribution rights (“IDRs”) represent the right to receive increasing percentages (from 15.0% to 50.0%) of quarterly distributions from operating surplus after we achieve distributions in amounts exceeding specified target distribution levels. Our sponsor currently holds the IDRs but may transfer them at any time.
Cash Distributions to Unitholders
The partnership agreement sets forth the calculation to be used to determine the amount of cash distributions that our unitholders and our sponsor will receive.
Distributions that have been paid or declared related to the reporting period are considered in the determination of earnings per unit. The following table details the cash distribution paid or declared (in millions, except per unit amounts):
Quarter EndedDeclaration
Date
Record
Date
Payment
Date
Distribution 
Per Unit
Total Cash
Distribution
Total Payment to holder of Incentive Distribution Rights
June 30, 2019July 31, 2019August 15, 2019August 29, 2019$0.6600 $22.1 $2.8 
September 30, 2019October 30, 2019November 15, 2019November 29, 2019$0.6700 $22.4 $3.1 
December 31, 2019January 29, 2020February 14, 2020February 28, 2020$0.6750 $22.7 $3.3 
March 31, 2020April 29, 2020May 15, 2020May 29, 2020$0.6800 $22.9 $3.5 
June 30, 2020August 5, 2020August 14, 2020August 28, 2020$0.7650 $30.4 $7.5 
September 30, 2020October 30, 2020November 13, 2020November 27, 2020$0.7750 $30.8 $7.9 
December 31, 2020January 29, 2021February 15, 2021February 26, 2021$0.7800 $31.2 $8.1 
For purposes of calculating our earnings per unit under the two-class method, common units are treated as participating preferrednew Series A units. IDRs are treated as participating securities.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Distributions made in future periods based on the current period calculation of cash available for distribution are allocated to each class of equity that will receive the distribution. Any unpaid cumulative distributions are allocatedSeries B Units
Holdings had previously issued 14.1 million Series B units to the appropriate classprevious Series B limited partners in exchange for certain assets. On the date of equity.the Recapitalization, the previously issued Series B units were bought out by holders who received new Series A units.
WeSeries C Units
Holdings had issued 6.0 million Series C units pursuant to restricted unit agreements (“Restricted Unit Agreements”). The Series C units were intended to constitute “profits interests” as defined by the Internal Revenue Service. On the date of the Recapitalization, the previously issued Series C units were cancelled and extinguished for no consideration.
Series D Units
Holdings had issued an aggregate of 113.2 million Series D units. On the date of the Recapitalization, the issued Series D units were bought out by holders who received new Series A units.
Series E Units
Holdings had issued 1.1 million Series E units pursuant to Restricted Unit Agreements. The Series E units were intended to constitute “profits interests” as defined by the Internal Revenue Service. On the date of the Recapitalization, the previously issued Series E units were cancelled and extinguished for no consideration.
Noncontrolling Interests
Noncontrolling interests of partners’ capital consist of: (1) third-party equity ownership in the Partnership (2) the Hamlet JV and (3) the Development JV.
The Partnership
Prior to the Simplification Transaction, Holdings owned common units of the Partnership representing an approximate 30% limited partner interest. Holdings was an indirect owner of the Partnership’s general partner, which held the intercompany incentive distribution rights (“IDRs”) of the Partnership until December 31, 2020 and was an indirect owner of MLP Holdco, LLC, which held the IDRs between January 1, 2021 and the Simplification Transaction.
Between January 1, 2021 and the Simplification Transaction, the Partnership issued 4,925,000 of its common units at a price of $45.50 per common unit for total net proceeds of $214.5 million, after deducting $9.5 million of issuance costs. During the year ended December 31, 2020, the Partnership issued 6.2 million common units in a private placement at a price of $32.50 per common unit for gross proceeds of $200.0 million. The Partnership received proceeds of $190.5 million, net of $9.5 million of issuance costs. During the year ended December 31, 2019, the Partnership issued 3.5 million common units in a registered direct offering for net proceeds of approximately $97.0 million, net of $3.0 million of issuance costs.
The partnership agreement of the Partnership contained provisions for the allocation of its net income and loss to its limited partners and its general partner. For purposes of maintaining partners’ capital accounts, items of income and loss were allocated among the limited partners in accordance with their respective percentage ownership interests. Normal allocations according to percentage interests were made after giving effect, if any, to priority income allocations in an amount equal to intercompany IDRs allocated 100% to the Partnership’s general partner through December 31, 2020 and MLP Holdco between January 1, 2020 and the Simplification Transaction.
The Partnership had distributed a quarterly cash distribution to its unitholders pursuant to a cash distribution policy. The partnership agreement had set forth the calculation to be used to determine the amount of cash available for distribution for each quarter in accordance withdistributions that our partnership agreement. The amount to be distributed to unitholders and IDR holders is based onour former sponsor would receive.
Aside from the distribution waterfalldistributions made by the Partnership set forth in our partnership agreement. Net earnings forbelow, no distributions have been made to the quarter are allocated to each class of partnership interest based on the distributions to be made.
Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses and gains and losses that pursuant to GAAP are included in comprehensive income (loss) but excluded from net income (loss).
the Class A – E holders or Class A and B holders subsequent to the recapitalization. The following table presentsdetails the changes in accumulated other comprehensive income (loss)cash distribution paid or declared by the Partnership (in millions, except per unit amounts):
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
Accumulated other comprehensive income at December 31, 2018Quarter EndedDeclaration DateRecord DatePayment DateDistribution Per Unit
June 30, 2020August 5, 2020August 14, 2020August 28, 2020$4390.7650 
Cumulative effect of accounting change - derivative instruments18 
Net unrealized losses on cash flow hedges(146)
Reclassification of net gains on cash flow hedges realized into net loss(288)
Accumulated other comprehensive income at December 31, 201923 
Reclassification of net gains on cash flow hedges realized into net lossSeptember 30, 2020October 30, 2020November 13, 2020November 27, 2020$(22)0.7750 
Currency translation adjustment(19)
Accumulated other comprehensive loss at December 31, 2020January 29, 2021February 15, 2021February 26, 2021$(18)0.7800 
March 31, 2021April 28, 2021May 14, 2021May 28, 2021$0.7850 
June 30, 2021July 27, 2021August 13, 2021August 27, 2021$0.8150 
September 30, 2021November 3, 2021November 15, 2021November 26, 2021$0.8400 
December 31, 2021February 2, 2022February 14, 2022February 25, 2022$0.8600 
Hamlet JV
The capital of the Hamlet JV is divided into two classifications: (1) Class A Units and (2) Class B Units, issued at a price of $1.00 per unit for each class.
Class A Units - Noncontrolling Interests
Class A Units were issued to John Hancockthe third-party member in exchange for capital contributions at a price of $1.00 for each Class A Unit.
John HancockThe third-party member had a total capital commitment of $235.2 million and, as of December 31, 2020, John Hancock2021, the third-party member held 227.0 million Class A Units with a remaining capital commitment amount of $8.2 million.
Class B Units - Controlling Interests
Class B Units were issued to the PartnershipEnviva in exchange for capital contributions at a price of $1.00 for each Class B Unit.
The PartnershipEnviva had a total capital commitment of $232.2 million and, as of December 31, 2020, the Partnership2021, held 224.0 million Class B Units with a remaining commitment amount of $8.2 million.
Pursuant to the limited liability company agreement of the Hamlet JV (the “Hamlet JV LLCA”), we are the managing member of the Hamlet JV and have the authority to manage the business and affairs of the Hamlet JV and take actions on its behalf, including adopting annual budgets, entering into agreements, effecting asset sales or biomass purchase agreements, making capital calls, incurring debt, and taking other actions, subject to consent of John Hancockthe third-party member in certain circumstances. The Hamlet JV LLCA also sets forth the capital commitments and limitations thereon from each of the members and provides for the allocation of sale proceeds and distributions among the holders of outstanding Class A Units and Class B Units.
We included all accounts of the Hamlet JV in our consolidated results as of April 2, 2019 as the Class B Units represent a controlling interest in the Hamlet JV.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Distribution Rights
Distributions to John Hancockthe third-party member and to the PartnershipEnviva are made in theour reasonable discretion of the Partnership as managing member and are governed by the waterfall provisions of the Hamlet JV LLCA, which provides that distributions, after repayment of revolving borrowings under the Hamlet JV Revolver, are to be made as follows:
First: To the members in proportion to their relative unreturned capital contributions, then to the members in proportion to their relative unpaid preference amount.
Thereafter: 25% to John Hancockthe third-party member and 75% to the Partnership.Enviva.
Wilmington Drop-DownDevelopment JV
Wilmington wasOur former sponsor held a wholly owned subsidiarycontrolling interest, and a third-party member held a noncontrolling interest, in the Development JV. In February 2021, we purchased all of the Hamlet JV prior to the consummation of the Wilmington Drop-Down. Our consolidated financial statements for the periods prior to October 2, 2017, were retrospectively recast to include the financial results of Wilmington as if the consummation of the Wilmington Drop-Down had occurred on May 15, 2013, the date Wilmington was originally organized. The interests of the Hamlet JV’s third-party investors in Wilmington for periods prior to the related drop-down transactions have been reflected as a non-controlling interest in our financial statements. Our consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018 contained 0 noncontrollingmember’s limited liability company interests in Wilmington.Development JV. We paid a first installment of approximately $130.1 million in February 2021 and a final installment of $23.7 million was paid in July 2021.
(18) Equity-Based Awards
Long-Term Incentive Plan (“LTIP”)
The General Partner maintainsWe maintain the LTIP, which provides for the grant, from time to time, at the discretion of theour board of directors of the General Partner or a committee thereof, of unit options, unitshare appreciation rights, restricted shares, restricted stock units phantom units,(“RSUs”), DERs, and other awards. The LTIP limits the number of common units that may be delivered pursuant to awards under the plan to 3,450,000 common unitsshares in accordance with the second amendment to the LTIP,Plan, which became effective on January 27,December 31, 2021. If equity awards granted under the LTIP are forfeited, canceled, exercised, paid in cash, or otherwise terminate or expire without the actual delivery of the
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
underlying common units,shares, the corresponding number of such common unitsshares will remain available for delivery pursuant to other awards under the LTIP. The common unitsshares issuable pursuant to the LTIP will consist, in whole or in part, of common unitsshares acquired in the open market or from any affiliate or any other person, newly issued common unitsshares, or any combination of the foregoing as determined by theour board of directors of the General Partner or a committee thereof.
During 2021, 2020, and 2019, and 2018, theour board of directors of the General Partner granted phantom unitsRSUs in tandem with corresponding DERs to our employees of Enviva Management Company who provide services to us (the “Affiliate Grants”) and phantom unitsRSUs in tandem with corresponding DERs to independent directorsmembers of the General Partnerour board of directors (the “Director Grants”). The phantom unitsRSUs and corresponding DERs are subject to certain vesting and forfeiture provisions. Award recipients do not have all of the rights of a common unitholdershareholder with respect to the phantom unitsRSUs until the phantom unitsRSUs have vested and been settled. Awards of the phantom unitsRSUs settled in common unitsshare are settled within 60 days after the applicable vesting date. If a phantom unitRSU award recipient experiences a termination of service under certain circumstances set forth in the applicable award agreement, the unvested phantom unitsRSUs and corresponding DERs (in the case of performance-based Affiliate Grants) are forfeited. Forfeitures are recognized when the actual forfeiture occurs.
Restricted Shares
Certain employees had received Series B units of our former sponsor that were intended to constitute “profits interests” as defined by the Internal Revenue Service that, due to the Simplification Transaction, converted into common units of the Partnership. In August 2020, our former sponsor had issued equity-classified awards where it may issue up to 10,000 Series B units. Our former sponsor had issued 25% initially, or 2,500 Series B units, and expected to issue an additional 25% on each anniversary over the following three years. These Series B units were measured at the grant date fair value, which was estimated using a probability weighted discounted cash flow approach to be approximately $38.5 million where we recognized $23.8 million and $13.9 million as non-cash equity-based compensation and other expense during the years ended December 31, 2021 and 2020, respectively. Of the $23.8 million recognized during the year ended December 31, 2021, $16.6 million was due to the accelerated vesting of all otherwise unvested Series B units as a result of the Simplification Transaction. After the Simplification Transaction, an additional $3.2 million was recognized as non-cash equity-based compensation and other expense during the year ended December 31, 2021 related to common shares of Enviva Inc. subject to restriction into which the Series B units were converted. The common shares subject to restriction will have their restrictions released as follows: one-third on each of December 31, 2022, 2023 and 2024. The unrecognized estimated non-cash equity-based compensation and other expense relating to outstanding common shares subject to restriction at December 31, 2021 was $47.3 million, which will be recognized over the remaining vesting period.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Affiliate Grants
A summary of the Affiliate Grants for the years ended December 31, 2021, 2020, 2019 and 20182019 is as follows:
Time-Based Phantom UnitsPerformance-Based Phantom UnitsTotal Affiliate Grant Phantom Units
UnitsWeighted-Average Grant Date Fair Value (per unit)(1)UnitsWeighted-Average Grant Date Fair Value (per unit)(1)UnitsWeighted-Average Grant Date Fair Value (per unit)(1)
Nonvested December 31, 2017595,866 $22.32 111,104 $25.52 706,970 $22.82 
Granted398,729 $29.15 171,104 $28.92 569,833 $29.08 
Adjusted$19,832 $18.19 19,832 $18.19 
Forfeitures(89,119)$25.59 (17,469)$25.76 (106,588)$25.62 
Vested(181,536)$21.42 (45,059)$23.80 (226,595)$21.89 
Nonvested December 31, 2018723,940 $25.91 239,512 $27.65 963,452 $26.34 
Granted395,851 $30.41 219,943 $30.28 615,794 $30.36 
Forfeitures(99,999)$28.56 (24,185)$29.82 (124,184)$28.80 
Vested(145,506)$18.30 $(145,506)$18.30 
Nonvested December 31, 2019874,286 $28.90 435,270 $28.84 1,309,556 $28.88 
Granted552,988 $37.98 387,060 $38.02 940,048 $38.00 
Forfeitures(133,273)$33.15 (105,935)$30.89 (239,208)$32.15 
Vested(232,116)$26.97 (67,881)$28.03 (299,997)$27.21 
Nonvested December 31, 20201,061,885 $33.52 648,514 $34.07 1,710,399 $33.73 
____________________________________________
Time-Based Restricted Stock UnitsPerformance-Based Restricted Stock UnitsTotal Affiliate Grant Restricted Stock Units
UnitsWeighted-Average Grant Date Fair Value (per unit)(1)UnitsWeighted-Average Grant Date Fair Value (per unit)(1)UnitsWeighted-Average Grant Date Fair Value (per unit)(1)
Nonvested December 31, 2018723,940 $25.91 239,512 $27.65 963,452 $26.34 
Granted395,851 $30.41 219,943 $30.28 615,794 $30.36 
Forfeitures(99,999)$28.56 (24,185)$29.82 (124,184)$28.80 
Vested(145,506)$18.30 — $— (145,506)$18.30 
Nonvested December 31, 2019874,286 $28.90 435,270 $28.84 1,309,556 $28.88 
Granted552,988 $37.98 387,060 $38.02 940,048 $38.00 
Forfeitures(133,273)$33.15 (105,935)$30.89 (239,208)$32.15 
Vested(232,116)$26.97 (67,881)$28.03 (299,997)$27.21 
Nonvested December 31, 20201,061,885 $33.52 648,514 $34.07 1,710,399 $33.73 
Granted378,488 $51.96 165,549 $48.58 544,037 $50.93 
Forfeitures(125,784)$39.49 (49,145)$38.77 (174,929)$39.29 
Vested(312,528)$30.03 (156,801)$30.52 (469,329)$30.20 
Nonvested December 31, 20211,002,061 $40.82 608,117 $38.56 1,610,178 $39.97 
(1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.
Time-based Affiliate Grants vest on the third or fourth anniversary of the grant date and performance-based Affiliate Grants vest in three or four years, where the number of unitsshares that vest depend on achievement of specific performance milestones. We account for the delivery of common unitsshares upon the settlement of vested Affiliate Grants as if such common unitsshares were distributed by us. The fair value of the Affiliate Grants granted during 2021 and 2020 and 2019 was $35.7$27.7 million and $18.7$35.7 million, respectively, based on the market price per unitshare on the applicable date of grant. The grant date fair value of performance-based Affiliate Grants is reported based on the probable outcome of the performance conditions on the grant date. The fair value of the Affiliate Grants is expensed by Enviva Management Company at the grant date. Compensation expense is based on the grant date fair value. Changes in unit-basednon-cash equity-based compensation expense due to passage of time, forfeitures, probability of meeting required performance conditions, and final settlements are recorded as adjustments to unit-basednon-cash equity-based compensation expense and partners’ capital.equity. For performance-based Affiliate Grants, expense is accrued only to the extent that the performance goals are considered to be probable of occurring.
Enviva Management Company recognizes unit-basedWe recognize non-cash equity-based compensation expense for the unitsshares awarded and a portion of that expense is allocated to us under the MSAs in the same manner as other corporate expenses. Our portion of the unit-based compensation expense is included in cost of goods sold and selling, general, administrative, and administrativedevelopment expenses. We recognized $10.3$28.0 million, $5.0$25.1 million and $4.7$10.2 million of selling, general, administrative, and administrative expensedevelopment expenses associated with the Affiliate Grants during the years ended December 31, 2021, 2020, and 2019, and 2018, respectively. As performance goals were met during 2018, 0 unit-based compensation with respect to performance-based Affiliate Grants expense was adjusted.
We paid $5.0$11.0 million to Enviva Management Company to satisfy the withholding tax requirements associated with 232,116312,528 time-based Affiliate Grants and 67,881156,801 performance-based Affiliate Grants that vested under the LTIP during the year ended December 31, 2020.2021. We paid $1.9$5.0 million to Enviva Management Company to satisfy the withholding tax requirements associated with 145,506232,116 time-based Affiliate Grants that vested under the LTIP during the year ended December 31, 2019. NaN2020. No performance-based Affiliate Grants vested under the LTIP during the year ended December 31, 2019. The unrecognized estimated unit-basednon-cash equity-based compensation costexpense relating to outstanding Affiliate Grants at December 31, 20202021 was $14.1$41.3 million, which will be recognized over the remaining vesting period.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Director Grants
A summary of the Director Grant unit awards subject to vesting for the years ended December 31, 2021, 2020 2019 and 2018,2019, is as follows:
Time-Based Phantom Units
UnitsWeighted-Average Grant Date Fair Value (per unit)(1)
Nonvested December 31, 201715,840 $25.25 
Granted13,964 $28.65 
Vested(15,840)$25.25 
Nonvested December 31, 201813,964 $28.65 
Granted13,264 $30.16 
Vested(13,964)$28.65 
Nonvested December 31, 201913,264 $30.16 
Granted14,987 $38.37 
Vested(13,264)$30.16 
Nonvested December 31, 202014,987 $38.37 
____________________________________________
Time-Based Phantom Units
UnitsWeighted-Average Grant Date Fair Value (per unit)(1)
Nonvested December 31, 201813,964 $28.65 
Granted13,264 $30.16 
Vested(13,964)$28.65 
Nonvested December 31, 201913,264 $30.16 
Granted14,987 $38.37 
Vested(13,264)$30.16 
Nonvested December 31, 202014,987 $38.37 
Granted14,234 $48.48 
Vested(14,987)$38.37 
Nonvested December 31, 202114,234 $48.48 
(1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.
In January 2021 and April 2021, Director Grants valued at $0.6 million and $0.1 million, respectively, and which vest on the first anniversary of the grant date in January and April 2022, respectively, were granted. In January and August 2020, Director Grants valued at $0.5 million and $0.1 million were granted, which vestvested on the first anniversary of the grant dates, in January and August 2021, respectively. In January 2019, Director Grants valued at $0.4 million were granted. which vested on the first anniversary of the grant date in January 2020. In January 2021, the Director Grants that were unvested at December 31, 2020 vested and common unitsshares were issued in respect thereof.
During the year ended December 31, 2018, 420 common units In January 2019, Director Grants valued at $0.4 million were granted, and issued to independent directorswhich vested on the first anniversary of the General Partner as compensation for services performed on the General Partner’s board of directors. NaN common units were granted duringgrant date in January 2020.
For the years ended December 31, 2021, 2020, and 2019.
For the year ended December 31, 2020,2019 we recorded $0.8 million, $0.5 million of unit-based compensation expense with respect to the Director Grants. For each of the years ended December 31, 2019 and 2018, we recorded $0.4 million of unit-basednon-equity-based compensation expense with respect to the Director Grants. The unrecognized estimated unit-basednon-cash equity-based compensation cost relating to outstanding Director Grants at December 31, 20202021 is $0.1 million and will be recognized over the remaining vesting period.
DistributionDividend Equivalent Rights
DERs associated with the Affiliate Grants and the Director Grants subject to time-based vesting entitle the recipients to receive payments in respect thereof in a per-unitper-share amount that is equal to any distributions made by us to the holders of common unitsshares within 60 days following the record date for such distributions. The DERs associated with the Affiliate Grants subject to performance-based vesting will remain outstanding and unpaid from the grant date until the earlier of the settlement or forfeiture of the related performance-based phantom units.
DER distributions paid related to time-based Affiliate Grants were $3.5 million, $3.9 million $2.7 million and $1.8$2.7 million, respectively, for the years ended December 31, 2021, 2020 2019 and 2018.2019. At December 31, 2021 and December 31, 2020, there were 0no DER distributions unpaid related to time-based Affiliate Grants. At December 31, 2019, $0.6 million of 
DER distributions unpaid related to time-basedthe performance-based Affiliate Grants were included in related-party payables.as follows as of December 31:
20212020
Accrued liabilities$2,690 $1,697 
Other long-term liabilities4,501 2,942 
Total unpaid DERs related to performance-based Affiliate Grants$7,191 $4,639 
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

DER distributions unpaid related to the performance-based Affiliate Grants were as follows as of December 31:
20202019
Accrued liabilities$1,697 $397 
Other long-term liabilities2,942 1,193 
Total unpaid DERs related to performance-based Affiliate Grants$4,639 $1,590 
(19) Net Income (Loss)Loss per Limited Partner Unit
Net income (loss)loss per unit applicable to limited partners iswas computed by dividing limited partners’ interest inthe net income (loss), after deducting any incentive distributions,loss attributable to Enviva Inc. by the weighted-average number of outstanding units. Our net income (loss)
As Holdings is allocatedthe surviving entity for accounting purposes, the historical financial results prior to the limited partners in accordance with their respective ownership percentages, after giving effect to priority income allocationsSimplification Transaction are those of Holdings. Given that and the recapitalization, the number of outstanding units for incentive distributions, if any,2019, 2020, and the portion of 2021 prior to the holderSimplification Transaction constitutes the 16.0 million units issued to the owners of the IDRs, whichformer sponsor. For the portion of 2021 that is after the Simplification Transaction, the number of outstanding units are declared and paid following the close of each quarter. Earnings in excess of distributions are allocated to the limited partners based on their respective ownership interests. Payments made to our unitholders are determined in relation to actual distributions declared and are not based on the net income (loss) allocations used in the calculation of earnings per unit.
On May 30, 2018, the requirements under our partnership agreement for the conversion of all of our subordinated units into common units were satisfied and the subordination period for such subordinated units ended. As a result, all of our 11,905,138 outstanding subordinated units converted into common units on a 1-for-one basis. The conversion did not impact the amount of the cash distribution paid or the total number of our outstanding units representing limited partner interests. Our net income (loss) was allocated to the General Partner and the limited partners, including the holders of the subordinated units and IDR holders, in accordance with our partnership agreement.
In addition to the common units, we have identified the IDRs and phantom units as participating securities and apply the two-class method when calculating the net income (loss) per unit applicable to limited partners, which is based on the weighted-averageactual number of common units and subordinated units outstandingof the Company during thethat period. Diluted net income per unit includes the effects of potentially dilutive time-based and performance-based phantom units on our common units. Basic and diluted earnings per unit that previously was applicable to subordinated limited partners was the same because there were 0 potentially dilutive subordinated units outstanding.
The computation of net income (loss) available per limited partner unit is as follows for the years ended December 31:
202020192018
Enviva Partners, LP limited partners’ interest in net income (loss)$13,624 $(5,822)$6,952 
Less: Distributions declared on:
Common units$115,318 $88,761 $54,604 
Subordinated units through end of subordination period12,407 
IDRs26,917 11,439 5,867 
Total distributions declared142,235 100,200 72,878 
Earnings less than distributions$(128,611)$(106,022)$(65,926)
Basic and diluted net (loss) income per limited partner unit is as follows:
Year Ended December 31, 2020Common
Units
General
Partner
Weighted-average common units outstanding—basic36,813 — 
Effect of nonvested phantom units— — 
Weighted-average common units outstanding—diluted36,813 — 
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

Year Ended December 31, 2020Common
Units
General
Partner
Total
Distributions declared$115,318 $26,917 $142,235 
Earnings less than distributions(128,611)— (128,611)
Net (loss) income available to partners$(13,293)$26,917 $13,624 
Weighted-average units outstanding—basic and diluted36,813 
Net loss per limited partner unit—basic and diluted$(0.36)
Year Ended December 31, 2019Common
Units
General
Partner
Weighted-average common units outstanding—basic31,791 — 
Effect of nonvested phantom units— — 
Weighted-average common units outstanding—diluted31,791 — 
Year Ended December 31, 2019Common
Units
General
Partner
Total
Distributions declared$88,761 $11,439 $100,200 
Earnings less than distributions(106,022)— (106,022)
Net (loss) income available to partners$(17,261)$11,439 $(5,822)
Weighted-average units outstanding—basic and diluted31,791 
Net loss per limited partner unit—basic and diluted$(0.54)
Year Ended December 31, 2018Common
Units
Subordinated
Units
General
Partner
Weighted-average common units outstanding—basic21,533 4,893 — 
Effect of nonvested phantom units1,020 — 
Weighted-average common units outstanding—diluted22,553 4,893 — 
Year Ended December 31, 2018Common
Units
Subordinated
Units
General
Partner
Total
Distributions declared$54,604 $12,407 $5,867 $72,878 
Earnings less than distributions(53,720)(12,206)— (65,926)
Net income available to partners$884 $201 $5,867 $6,952 
Weighted-average units outstanding—basic and diluted21,533 4,893 
Net income per limited partner unit—basic and diluted$0.04 $0.04 
(20) Commitments and Contingencies
Commitments
We have entered into throughput agreements expiring between 2023 and 2028 to receive terminal and stevedoring services at certain of our terminals, some of which include options to extend for up to 5 years. The agreements specify a minimum cargo throughput requirement at a fixed price per ton or a fixed fee, subject to an adjustment based on the consumer price index or the producer price index, for a defined period of time, ranging from monthly to annually. At December 31, 2020,2021, we had approximately $22.8$20.0 million related to firm commitments under such terminal and stevedoring services agreements. For the years ended December 31, 2021, 2020 2019 and 2018,2019, terminal and stevedoring services expenses were $12.3 million, $9.7 million $11.3 million and $9.8$11.3 million, respectively.
We have entered into long-term arrangements to secure transportation from our plants to our export terminals. Under certain of these agreements, which expire between 2023 through 2026, we are committed to various annual minimum volumes under
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)

multi-year fixed-cost contracts with third-party logistics providers for trucking and rail transportation, subject to increases in the consumer price index and certain fuel price adjustments. For the years ended December 31, 2021, 2020 2019 and 2018,2019, ground transportation expenses were $30.7$43.8 million, $25.5$36.6 million and $29.8$34.7 million, respectively.
We have entered into long-term supply arrangements, expiring between 20212023 through 2026, to secure the supply of wood pellets from third-party vendors and related parties. The minimum annual purchase volumes are at a fixed price per MT adjusted for volume, pellet quality and certain shipping-related charges. The supply agreements for the purchase of 1,080,000450,000 MT of wood pellets from British Columbia are fully offset by an agreement to sell 1,080,000450,000 MT of wood pellets to the same counterparty from our terminal locations, where $237.5$69.4 million remains to be sold as of December 31, 2020.2021. Under long-term supply arrangements, we purchased approximately $43.2$109.6 million, $51.6$25.1 million and $29.5$51.6 million of wood pellets for the years ended December 31, 2021, 2020 2019 and 2018,2019, respectively.
Fixed and determinable portions of the minimum aggregate future payments under these firm terminal and stevedoring services, ground transportation and wood pellet supply agreements for the next five years are as follows:
2021$142,383 
20222022119,881 2022$136,103 
20232023112,633 2023129,292 
2024202483,182 2024100,347 
2025202541,673 202580,199 
2026202660,328 
TotalTotal$499,752 Total$506,269 
In order to mitigate volatility in our shipping costs, we have entered into fixed-price shipping contracts with reputable shippers matching the terms and volumes of certain of our off-take contracts for which we are responsible for arranging shipping. Contracts with shippers, expiring between 20212022 through 2039, include provisions as to the minimum amount of MTPY to be shipped and may also stipulate the number of shipments. Pursuant to these contracts, the terms of which extend up to seventeen17 years, charges are based on a fixed-price per MT and, in some cases, there are adjustment provisions for increases in the price of fuel or for other distribution-related costs. The charge per MT varies depending on the loading and discharge port. Shipping expenses included in cost of goods sold was $75.0 million for the year ended December 31, 2020 and $64.1 million for each of the years ended December 31, 2021, 2020 and 2019 was $94.7 million, $75.0 million and 2018.$64.1 million, respectively.
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Notes to Consolidated Financial Statements (Continued)
(In thousands, except number of units, per unit amounts and unless otherwise noted)
(21) Subsequent Event
Issuance of Common Stock
In January 2022, we issued 4,950,000 shares of common shares at a price of $70.00 per share common share for total net proceeds of $334.0 million, after deducting $12.2 million of issuance costs. We intend to use the net proceeds of $334.0 million to fund a portion of our capital expenditures relating to ongoing development projects. We initially used the net proceeds to repay borrowings under our senior secured revolving credit facility.
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ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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ITEM 9A.    CONTROLS AND PROCEDURES 
Disclosure Controls and Procedures
An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Exchange Act) was carried out under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer of our General Partner.Officer. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on their evaluation, the Chief Executive Officer and Chief Financial Officer of our General Partner concluded that the design and operation of our disclosure controls and procedures were effective as of December 31, 2020,2021, the end of the period covered by this Annual Report.
Internal Control over Financial Reporting
Management’s Annual Report on Internal Control over Financial Reporting
TheOur management of our General Partner is responsible for establishing and maintaining adequate internal control over financial reporting for us as defined in Rules 13a‑15(f) and 15d‑15(f) of the Exchange Act. Under the supervision of, and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control—Integrated Framework in 2013, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management of our General Partner concluded that our internal control over financial reporting was effective as of December 31, 2020.2021. The effectiveness of our internal control over financial reporting as of December 31, 20202021 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included in Part II, Item 8. “Financial Statements and Supplementary Data of this report.”
Inherent Limitations on Effectiveness of Controls
Control systems, no matter how well conceived and operated, are designed to provide a reasonable, but not an absolute, level of assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Because of the inherent limitations in any control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a‑15(e) and 15d‑15(e) under the Exchange Act) that occurred during the three months ended December 31, 20202021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We acquired Georgia Biomass Holding, LLC and Enviva Pellets Greenwood Holdings II, LLC during the year ended December 31, 2020, as described in Notes 3 and 4 to our consolidated financial statements included in this Annual Report on Form 10-K. The acquired businesses are included in our 2020 consolidated financial statements and together constituted approximately 23% and 2% of total assets and net assets, respectively, as of December 31, 2020 and 5% of revenues for the year then ended. We are in the process of evaluating the existing controls and procedures of the acquired businesses and are implementing our internal control structure over these acquired businesses. In accordance with SEC guidance permitting the exclusion of an acquired business from management’s assessment of the effectiveness of internal control over financial reporting for the year in which the acquisition is completed, we have excluded the acquired businesses from the assessment of the effectiveness of internal control over financial reporting as of December 31, 2020. The acquired businesses will be included in the assessment of the effectiveness of internal control over financial reporting as of December 31, 2021.
Indemnification for Consent from Predecessor Independent Registered Public Accounting Firm
We have agreed to indemnify and hold KPMG LLP (KPMG) harmless against and from any and all legal costs and expenses incurred by KPMG in successful defense of any legal action or proceeding that arises as a result of KPMG’s consent to the incorporation by reference of KPMG’s audit report on the Partnership’s financial statements incorporated by reference into the Partnership’s registration statements on Form S-8 (File No. 333-236150 and 333-203756) and Form S-3 (333-232247).
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Report of Independent Registered Public Accounting Firm

To the UnitholdersStockholders and the Board of Directors of Enviva Partners, LPInc.
Opinion on Internal Control Over Financial Reporting
We have audited Enviva Partners, LPInc. and subsidiaries’ internal control over financial reporting as of December 31, 2020,2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Enviva Partners, LPInc. and subsidiaries (the Partnership)Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020,2021, based on the COSO criteria.
As indicated in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Georgia Biomass Holding, LLC and Enviva Pellets Greenwood Holdings II, LLC, which are included in the 2020 consolidated financial statements of the Partnership and together constituted approximately 23% and 2% of total assets and net assets, respectively, as of December 31, 2020 and 5% of revenues for the year then ended. Our audit of internal control over financial reporting of the Partnership also did not include an evaluation of the internal control over financial reporting of Georgia Biomass Holding, LLC and Enviva Pellets Greenwood Holdings II, LLC.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Enviva Partners, LPInc. and subsidiaries as of December 31, 20202021 and 2019,2020, the related consolidated statements of operations, comprehensive (loss) income,loss, changes in partners’ capitalequity and cash flows for each of the twothree years in the period ended December 31, 2020,2021, and the related notes (collectively referred to as the “consolidated financial statements”) and our report dated February 25, 2021March 4, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
Management of the Partnership’s General PartnerThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Partnership’sCompany’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the PartnershipCompany in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Tysons, Virginia
February 25, 2021March 4, 2022
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ITEM 9B.    OTHER INFORMATION
None.
ITEM 9C.    DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III 
ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
On December 31, 2021, we completed our conversion from a master limited partnership named Enviva Partners, LP to a corporation named Enviva Inc. Subsequent to the Conversion, we operate under a customary corporate governance model and are subject to the Delaware General Corporation Law. We are managed and operatedgoverned by theour board of directors (our “Board”) and executive officers of our General Partner. Our unitholders are not entitled to elect our General Partner’s directors or otherwise directly participate in our management or operations. Our General Partner owes certain contractualwho owe fiduciary duties to our unitholders as well as a fiduciary duty to its owners.
As a result of owning our General Partner, our sponsor has the right to appoint all members of the board of directors of our General Partner (our “Board”). In evaluating director candidates, our sponsor will assess whether a candidate possesses the integrity, judgment, knowledge, experience, skill and expertise that are likely to enhance the Board’s ability to manage and direct our affairs and business, including, when applicable, to enhance the ability of committees of the Board to fulfill their duties.
The Board has ten directors, including five directors meeting the independence standards established by the New York Stock Exchange (the “NYSE”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Board met nine times during 2020.
All of the executive officers of our General Partner listed below allocate their time between managing the business and affairs of us and our sponsor. The amount of time that our executive officers devote to our business and the business of our sponsor varies in any given year based on a variety of factors. Our executive officers devote as much time to the management of our business as is necessary for the proper conduct of our business and affairs.
We incur general and administrative costs related to our management services agreements (“MSAs”) with Enviva Management Company LLC, a wholly owned subsidiary of our sponsor (together with its affiliates that provide services to us, as applicable, “Enviva Management Company”) that cover the corporate salary and overhead expenses associated with our business. If the MSAs were terminated without replacement, or our General Partner or its affiliates provided services outside of the scope of the MSAs, our partnership agreement would require us to reimburse our General Partner and its affiliates, including our sponsor, for all expenses incurred and payments made on our behalf.stockholders.
Executive Officers and Directors of Our General Partnerthe Company
The following table shows information for theour Board and executive officers and directors of our General Partner. As the owner of our General Partner, our sponsor appoints all members of the Board.officers. Directors hold office until their successors have been appointed or qualified or until the earlier of their death, resignation, removal, or disqualification. Executive officers are appointed by and serve at the discretion of the Board. Our corporate governance guidelines to provide that, unless the Board determines otherwise, a non-employee director shall retire from service on the Board effective as of the last day of the fiscal year in which the director has turned 80, provided that the Chairman of the Board may, in his or her sole discretion, waive this requirement for an individual director for up to two years. In 2020, William K. Reilly, one of our independent directors, was granted a one-year waiver pursuant to the guidelines.
There are no family relationships among any of our directors or executive officers. One of our directors and all of our executive officers also serve as executive officers of our sponsor.
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Name of Beneficial OwnerAgePosition With Our General Partner
John K. Keppler5051Chairman, President and Chief Executive Officer
Shai S. Even5253Executive Vice President and Chief Financial Officer
William H. Schmidt, Jr.4849Executive Vice President, Corporate Development and General Counsel
Thomas Meth4849Executive Vice President Sales and MarketingChief Commercial Officer
E. Royal Smith4849Executive Vice President, Operations
Joseph N. LaneRoxanne B. Klein4045Executive Vice President and Chief Human CapitalResources Officer
Yanina A. Kravtsova4445Executive Vice President, Communications, Public and Environmental Affairs
Michael A. Johnson56Vice President and Chief Accounting Officer
Ralph Alexander6566Director
John C. Bumgarner, Jr.7879Director
Martin N. Davidson60Director
Jim H. Derryberry7677Director
Christopher B. HuntFauzul Lakhani5734Director
Gerrit “Gerrity” L. Lansing, Jr.4849Director
Pierre F. Lapeyre, Jr.59Director
William K. ReillyDavid M. Leuschen8170Director
Jeffrey W. Ubben5960Director
Gary L. Whitlock7172Director
Janet S. Wong6263Director
Eva T. Zlotnicka39Director
John K. Keppler. Mr. Keppler joined the board of directors as Chairman and began serving as President and Chief Executive Officer of the general partner of Enviva Partners, LP in November 2013.He has servedcontinued to serve as Chairman of the board of directors, and President, and Chief Executive Officer of our General Partner since our inception in November 2013.Enviva Inc. Mr. Keppler co-founded Intrinergy, the predecessor to our former sponsor, in 2004. From 2002 to 2004, Mr. Keppler was the Director of Corporate Strategy in the Office of the Vice Chairman with America Online and, prior to that, he was Senior Manager, Business Affairs and Development with America Online from 2001 to 2002. Mr. Keppler holds a B.A. in political economy from the University of California, Berkeley, as well as an MBA from The Darden Graduate School of Business Administration at The University of Virginia. Over the course of Mr. Keppler’s career, he has gained extensive experience growing innovative ideas into successful businesses across a broad range of industries and has developed a wealth of experience in business strategy and operations and a keen knowledge of the renewable energy sector. For the past fifteensixteen years, Mr. Keppler has been responsible for setting our strategic direction and leading our growth from a start-up company to the world’s leading producer of wood biomass fuels. In light of this experience, we believe that he has the requisite set of skills to serve as a director, as well as Chairman, President and Chief Executive Officer.
Shai S. Even. Mr. Even has servedbegan serving as Executive Vice President and Chief Financial Officer of our General Partner sincethe general partner of Enviva Partners, LP in June 2018.2018 and has continued to serve as Executive Vice President and Chief Financial Officer of Enviva Inc. In this role, Mr. Evenleads Enviva’s finance, accounting, and information technology organizations and provides strategic leadership on finance matters. He has over 25 years of experience with operational and strategic finance, including in senior
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financial and management roles at master limited partnerships. Most recently, Mr. Even served as Senior Vice President and Chief Financial Officer of Alon USA Energy, Inc. and served as President and Chief Financial Officer of Alon USA Partners, LP. While at Alon, Mr. Even led Alon’s parent company’s successful IPO on the NYSE in 2005 and the successful IPO of Alon’s master limited partnership in 2012. During his tenure at Alon, he led the company’s two major acquisitions and scaled its finance organization to complement the growth of the company. Prior to joining Alon, Mr. Even served as the Chief Financial Officer of DCL Group in Tel Aviv, Israel, and as an auditor with KPMG. Mr. Even holds a bachelor’s degree in Economics and Accounting from Bar-Ilan University and is a certified public accountant.
William H. Schmidt, Jr. Mr. Schmidt has servedbegan serving as Executive Vice President, Corporate Development and General Counsel of our General Partner sincethe general partner of Enviva Partners, LP in February 2018 and, prior to that, as Executive Vice President, General Counsel and Secretary since our inception in November 2013.2013, and continues to serve as Executive Vice President, Corporate Development and General Counsel of Enviva Inc. He also has served as Executive Vice President, Corporate Development and General Counsel of our former sponsor’s general partner since February 2018 and, prior to that, as Executive Vice President, General Counsel and Secretary since March 2013. Mr. Schmidt also servesserved as President and General Counsel of Enviva Development Holdings, LLC, our former sponsor’s development company. In these capacities, Mr. Schmidt is responsible for our and our sponsor’s corporate development activities and legal affairs. Prior to joining Enviva, Mr. Schmidt was Senior Vice President and General Counsel of Buckeye GP LLC, the general partner of Buckeye Partners, L.P., a diversified master limited partnership. Mr. Schmidt also was President of Lodi Gas Storage, L.L.C., a subsidiary of Buckeye Partners, L.P., from August 2009 to January 2012. Prior to joining Buckeye in September 2004, Mr. Schmidt practiced law at Chadbourne & Parke LLP, an international law firm that subsequently merged with Norton Rose Fulbright.
Thomas Meth. Mr. Meth has servedbegan serving as Executive Vice President, Sales and Marketing of our General Partner since our inceptionthe general partner of Enviva Partners, LP in November 2013. 2013 and has continued to serve as Executive Vice President and Chief Commercial Officer of Enviva Inc.Hewas also a co-founder of Intrinergy. Mr. Meth is responsible for our commercial customer
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relations as well as our market development, customer fulfillment and shipping initiatives. Prior to Intrinergy, Mr. Meth was Head of Sales and Marketing in Europe, the Middle East, and Africa for the Colfax Corporation from 2002 to 2004. From 1993 to 2000, Mr. Meth was Director of Sales for Europay Austria, a consumer financial services company that offered MasterCard, Maestro, and Electronic Purse services. Mr. Meth holds a bachelor of commerce from Vienna University of Economics and Business Administration in Austria as well as an MBA from The Darden Graduate School of Business Administration at The University of Virginia. Mr. Meth was an executive officer of Intrinergy Deutschland Management GmbH (“IDM”) and Enviva Pellets GmbH and Co. KG (“EPD”), which were engaged in pellet manufacturing in Germany unrelated to our core business. Our predecessor distributed its indirect interests in IDM and EPD to our sponsor as part of the reorganization in connection with our IPO.
E. Royal Smith. Mr. Smith has servedbegan serving as Executive Vice President, Operations of our General Partner and our sponsor sincethe general partner of Enviva Partners, LP in August 2016 and prior to thatas Vice President, Operations sincein April 2014.2014, and continues to serve as Executive Vice President, Operations of Enviva Inc. Previously, he served as Director of Operations, NAA Division of Guilford Performance Textiles, a global textile manufacturing company, from March 2012 to July 2014. From August 2010 to March 2012, Mr. Smith also served as Director of Quality, NAA Division. Prior to joining Guilford, Mr. Smith worked as a Plant Manager at Pactiv, a food packaging manufacturer, from May 2009 to August 2010. Mr. Smith served as General Manager of a facility operated by United Plastics Group International from December 2005 to May 2009, after serving in other roles at the company from April 2002. From January 1999 to September 1999, he served as Production Supervisor of The General Motors Corporation, before serving as Mechanical Device/Tool and Die Supervisor from September 1999 to August 2000. Mr. Smith holds a B.S. in Mechanical Engineering from GMI Engineering and Management Institute.
Joseph N. LaneRoxanne B. Klein. Mr. Lane has servedMs. Klein began serving as Executive Vice President and Chief Human Resources Officer of the general partner of Enviva Partners, LP in December 2021 and continues to serve as Executive Vice President and Chief Human Resources Officer of Enviva Inc. With years of Human Capital of our General PartnerResources leadership experience in the manufacturing industry, Roxanne has an extensive and our sponsor since March 2018. Previously, Mr. Lane wasproven background building successful talent acquisition and development teams and driving best practices in people management and social impact. Prior to joining Enviva, Ms. Klein spent six years as Senior Vice President and Chief Human Resources Officer for Knoll, Inc., one of Asia Pacificthe world’s leading global manufacturers of Milliken & Company sinceoffice and other furniture. Prior to that, she held progressively increasing leadership roles at Knoll from 2007 to 2015 after holding roles with progressively more responsibility since joining the company in 2001. Over the course of Mr. Lane’s career, he has gained a wealth of valuable experience dealing with talent-related matters associated with scaling organizations, mergers and acquisitions activity, industrial manufacturing and international operations. Mr. Lane received a Bachelor of Science in Business Administration with an emphasis in Human Resources Management from Clemson University in 2003 as well as additional Human Resources leadership roles at Praxair, Inc. and Danaher Corporation. Ms. Klein holds a B.B.A. from Temple University and an MBAM.B.A. from the Babcock Graduate School of Business Administration at Wake Forest University in 2009. He holds the SHRM certification for Senior HR Professionals (SPHR-CP).DeSales University.
Yanina A. Kravtsova. Ms. Kravtsova has servedbegan serving as Executive Vice President, Communications, Public & Environmental Affairs of our General Partner sincethe general partner of Enviva Partners, LP, in December 2019 and, prior to that, as Vice President, Environmental Affairs and Chief Compliance Officer fromin October 2018.2018, and continues to serve as Executive Vice President, Communications, Public & Environmental Affairs of Enviva Inc. In her current role, Ms. Kravtsova leads the teams responsible for media, governmental and community relations, as well as environmental permitting of our facilities. Ms. Kravtsova brings to Enviva over 20 years of leadership and senior management experience in the renewable energy and power sector. Prior to joining Enviva, Ms. Kravtsova served as Senior Vice President, General Counsel and Secretary of Terraform Global, Inc. from
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February 2015. Ms. Kravtsova was also Legal Head of Renewable Energy Investments at Google Inc. from August 2011 to January 2015. Ms. Kravtsova practiced law at Clifford Chance U.S. LLP, Latham & Watkins LLP, and The World Bank Group, handling international project finance, regulatory, and corporate matters for energy projects.
Michael A. Johnson. Mr. Johnson began serving as Vice President and Chief Accounting Officer of the general partner of Enviva Partners, LP in July 2021 and continues to serve as Vice President and Chief Accounting Officer of Enviva Inc. In this role, he is responsible for managing Enviva’s accounting systems and financial controls with a focus on ensuring timely and accurate internal and external financial reporting and maintaining regulatory compliance. Mr. Johnson is an accomplished finance professional with years of experience as an accounting and controllership leader for public companies within the energy industry. Prior to joining Enviva, he spent three years at SandRidge Energy, an oil and gas company, most recently serving as their Chief Financial Officer. Prior to that, he built a successful 24-year career at Chesapeake Energy Corporation, beginning as Assistant Controller before spending 17 years in the role of Senior Vice President & Chief Accounting Officer. He gained additional audit and financial reporting experience at Phibro Energy Production and Arthur Andersen. Mr. Johnson holds a B.B.A. in Accounting from the University of Texas and is a Certified Public Accountant.
Ralph Alexander. Mr. Alexander joined the board of directors of the general partner of Enviva Partners, LP in November 2013 and has continued to serve as a member of the board of directors of Enviva Inc. He has served as director on the Board since our inception in November 2013. Mr. Alexander has served as theExecutive Chairman of the Board and CEO of Talen Energy since November 2021, where he previously served as Chairman and CEO from December 2016. He becameMr. Alexander was affiliated with Riverstone Holdings LLC infrom September 2007.2007 to December 2016. For nearly 25 years, Mr. Alexanderhe served in various positions with subsidiaries and affiliates of BP plc, one of the world’s largest oil and gas companies. From June 2004 until December 2006, heMr. Alexander served as Chief Executive Officer of Innovene, BP’s $20 billion olefins and derivatives subsidiary. From 2001 until June 2004, he served as Chief Executive Officer of BP’s Gas, Power and Renewables and Solar segment and was a member of the BP group executive committee. Prior to that, Mr. Alexander served as a Group Vice President in BP’s Exploration and Production segment and BP’s Refinery and Marketing segment. He held responsibilities for various regions of the world, including North America, Russia, the Caspian, Africa, and Latin America. Prior to these positions, Mr. Alexander held various positions in the upstream, downstream, and finance groups of BP. Mr. Alexander has served on the board of Talen Energy Corporation since June 2015. From December 2014 through December 2016, Mr. Alexander served on the board of EP Energy Corporation. He has previously served on the boards of Foster Wheeler, Stein Mart, Inc., Amyris, and Anglo‑American plc. Mr. Alexander holds an M.S. in Nuclear Engineering from Brooklyn Polytech (now NYU School of Engineering—Polytechnic)Engineering) and an M.S. in Management Science from Stanford University. We believe that Mr. Alexander’s energy and power expertise, experience in international markets, and prior public company directorships enable him to provide critical insight and guidance to our management team and board of directors.
John C. Bumgarner, Jr. Mr. Bumgarner joined the board of directors of the general partner of Enviva Partners, LP in April 2015 and has servedcontinued to serve as a director onmember of the Board since April 2015.board of directors of Enviva Inc. Mr. Bumgarner has been engaged in private investment since November 2002, and currently assists in operating a family-owned,family owned, multi-faceted real estate company. Mr. Bumgarner previously served as Co-Chief Operating Officer and President of Strategic Investments for Williams Communications Group, Inc., a high technology company, from May 2001 to November 2002. Mr. Bumgarner joined
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The Williams Companies, Inc., in 1977 and, prior to working at Williams Communications Group, Inc., served as Senior Vice President of Williams Companies Corporate Development and Planning, President of Williams International Company and President of Williams Real Estate Company. He most recently served as a director of Energy Partners, Ltd., an oil and natural gas exploration and production company, from January 2000 to February 2009, and at Market Planning Solutions Inc. from February 1982 until April 2011. Mr. Bumgarner holds a B.S. from the University of Kansas and an M.B.A. from Stanford University. Mr. Bumgarner’s substantial experience as an executive at a conglomerate and as a director on boards of public and private companies engaged in a variety of industries provide him with unique insight that is particularly helpful and valuable to the Board.board of directors of our Company.
Martin N. Davidson, Ph.D. Dr. Davidson joined the board of directors of Enviva Inc. in December 2021. He is the Johnson & Higgins Professor of Business Administration at the University of Virginia’s Darden School of Business. Dr. Davidson currently serves as senior associate dean and global chief diversity officer for the school. He teaches, conducts research, and consults with global leaders to help them use diversity strategically to drive high performance. His thought leadership has changed how many executives approach inclusion and diversity in their organizations. His book, The End of Diversity as We Know It: Why Diversity Efforts Fail and How Leveraging Difference Can Succeed, co-authored with Heather Wishik, introduces a research-driven roadmap to help leaders more effectively create and capitalize on diversity in organizations. Dr. Davidson has consulted with leaders of a host of global firms, government agencies, and social profit organizations, including Bank of America, The World Health Organization, The Walt Disney Company, Credit Suisse Group, The Nature Conservancy, and the U.S. Navy SEALs. Dr. Davidson has been featured in numerous media outlets, including The New York Times, Bloomberg BusinessWeek, The Wall Street Journal, The Washington Post, National Public Radio, and CNN. He has been a member of the Darden faculty since 1998. Previously, he was a member of the Amos Tuck School of Business faculty at
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Dartmouth College. He earned his A.B. from Harvard University and his Ph.D. from Stanford University. Dr. Davidson’s academic research, writing, and consulting on a variety of topics, with a specific emphasis on diversity, equity, and inclusion, will provide immense value to the board of directors.
Jim H. Derryberry. Mr. Derryberry joined the board of directors of the general partner of Enviva Partners, LP in July 2018 and has servedcontinued to serve as a director onmember of the Board since July 2018.board of directors of Enviva Inc. Mr. Derryberry served as a director of USA Compression GP, LLC from January 2013 to April 2018. He is currently a special advisor for Riverstone Holdings LLC where he held the office of Chief Operating Officer and Chief Financial Officer until 2006. Prior to joining Riverstone, Mr. Derryberry was a managing director of J.P. Morgan where he was head of the Natural Resources and Power Group. He had previously served in the Goldman Sachs Global Energy and Power Group where he was responsible for mergers and acquisitions, capital markets financing, and the management of relationships with major energy companies. He also served on the boardBoard of directorsDirectors of Magellan GP, LLC, the general partner of Magellan Midstream Partners, L.P, from 2005-2006. Mr. Derryberry has been a member of the Board of Overseers for the Hoover Institution at Stanford University and is a member of the Engineering Advisory Board at the University of Texas at Austin. He received his B.S. and M.S. degrees in engineering from the University of Texas at Austin and earned an M.B.A. from Stanford University. Mr. Derryberry’s substantial experience in the energy and power industries and his operations expertise make him uniquely suited to provide the board of directors with invaluable insight and guidance.
Christopher B. Hunt.Fauzul Lakhani. Mr. Hunt has served as a director on the Board since April 2016. Mr. Hunt is a partner of Riverstone andLakhani joined Riverstone in 2008. In addition to serving on the boards of a number of Riverstone portfolio companies and their affiliates, he also currently serves on the board of directors of NTR Plc.Enviva Inc. in December 2021. He is a Principal of Riverstone Holdings L.L.C. Prior to joining Riverstone in 2012, Mr. Hunt ran international power development and generation businesses for BP plc and Enron Corporation. Mr. Hunt received his BA from Wesleyan University and his MBA from Columbia University. He has also completed various post-graduate programs at Harvard University, Stanford University, the Massachusetts Institute of Technology and Oxford University. Mr. Hunt brings extensive experienceLakhani was with Credit Suisse in the renewableGlobal Investment Banking Group. While at Credit Suisse, Mr. Lakhani worked on M&A transactions and capital markets financings, with a focus on the energy conventional powersector. Mr. Lakhani graduated with honors from the University of Texas at Austin with a B.B.A. in Finance. He currently serves on the B.B.A. Advisory Board of the McCombs School of Business. Mr. Lakhani’s investment banking and natural gas industries to the Board.finance background will make him a key asset on our board of directors.
Gerrit “Gerrity”(“Gerrity”) L. Lansing, Jr. Mr. Lansing joined the board of directors of the general partner of Enviva Partners, LP in October 2020 and has servedcontinued to serve as a director onmember of the Board since October 2020.board of directors of Enviva Inc. Mr. Lansing is a Managing Director and Partner of BTG Pactual and Head of BTG Pactual Tangible Assets Group, which includes BTG Pactual Timberland Investment Group (“TIG”). TIG is one of the world’s largest timberland investment managers with more than $3.5 billion under management and investments including more than 2.6 million acres across four continents. Mr. Lansing leads a management team at TIG with more than 800 years of combined experience and which operates in accordance with the UN Principles for Responsible Investment and with first-class sustainable forestry practices including those set forth by the Forest Stewardship Council and Programme for the Endorsement of Forest Certification, as validated by extensive independent audits. Prior to his current role, he was a Founder and Chief Executive Officer of Equator, LLC and its Brazilian subsidiary, TTG Brasil Investimentos Florestais Ltda, which was acquired by BTG Pactual in 2012. Prior to this, as Chief Executive Officer, Mr. Lansing spent nearly a decade building Madison Trading, LLC and Chatham Energy Partners, LLC (acquired by The Intercontinental Exchange). He is on the board of directors of the Nasher Museum of Art at Duke University, the Buckley School in New York City, the National Alliance of Forest Owners, and La Fundación de la Universidad del Valle de Guatemala. Mr. Lansing received his B.A. from Duke University. Mr. Lansing brings proven leadership and significant knowledge and expertise to the board of directors from his years of experience with socially responsible investing in the timberland industry, where he gained insight into sustainable forestry practices and maintained productive, respectful relationships with a broad range of stakeholders.
William K. Reilly.Pierre F. Lapeyre, Jr. Mr. Reilly has served as a director on the Board since April 2015. Mr. Reilly served as Administrator of the U.S. Environmental Protection Agency from 1989 to 1993. From October 1997 to December 2009, Mr. Reilly served as President and Chief Executive Officer of Aqua International Partners, an investment group that finances water improvements in emerging markets. He also served as Senior Advisor to TPG Capital from September 1994 to December 2016. In 2010, Mr. Reilly was appointed by President Obama as co-chair of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling and in 2012, President Obama named Mr. Reilly to the Council for Global Development. He currently serves as a director and chair of the board committee on environment, safety, security and health of Royal Caribbean Cruises Ltd. Mr. Reilly served as a director of Conoco Inc. from 1998 until its merger with Phillips Petroleum Company in 2002, and thereafter served as a director of ConocoPhillips until May 2013. From 1993 until April 2012, Mr. Reilly also served onLapeyre joined the board of directors of E.I. duPont de Nemoursthe general partner of Enviva Partners, LP in March 2021 and Company and was a director of Energy Future Holdings from 2007 to 2019. He has also previously served as the first Payne Visiting Professor at Stanford University, President of the World Wildlife Fund and President of The Conservation Foundation. He is Chairman Emeritus of the World Wildlife Fund and Chairman of the Nicholas Institute for Environmental Policy Solutions at Duke University. Mr. Reilly’s extensive environmental regulatory experience and his service on various other boards make him well qualifiedcontinued to serve as a member of the board of directors of Enviva Inc. Mr. Lapeyre is a co-founder and senior managing director of Riverstone Holdings LLC. Prior to co-founding Riverstone in 2000, Mr. Lapeyre was a managing director of Goldman Sachs in its Global Energy & Power Group. Mr. Lapeyre joined Goldman Sachs in 1986 and spent his 14-year investment banking career focused on energy and power and leading client coverage and execution of a wide variety of M&A, IPO, strategic advisory, and capital markets financings for clients across all sectors of the industry. Mr. Lapeyre received his B.S. in Finance/Economics from the University of Kentucky and his M.B.A. from the University of North Carolina at Chapel Hill. Mr. Lapeyre serves on the boards of directors or equivalent bodies of a number of public and private Riverstone portfolio companies and their affiliates, including Centennial Resource Development, Inc., Hyzon Motors, Inc. (f/k/a Decarbonization Plus Acquisition Corporation), Decarbonization Plus Acquisition Corporation IV, and Riverstone Energy Limited, and has previously served on the boards of directors of Decarbonization Plus Acquisition Corporation II (predecessor to Tritium DCFC Limited) and Decarbonization Plus Acquisition Corporation III (predecessor to Solid Power, Inc.). In addition to his duties at Riverstone, Mr. Lapeyre serves on the Executive Committee of the Board of Visitors of the MD Anderson Cancer Center and allow him to provide uniqueis a Trustee and Treasurer of The Convent of the Sacred Heart. We believe that Mr. Lapeyre’s considerable energy, private equity, and investment banking experience bring important and valuable perspective on matters criticalskills to our operations.board of directors.
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David M. Leuschen.
Mr. Leuschen joined the board of directors of the general partner of Enviva Partners, LP in April 2021 and has continued to serve as a member of the board of directors of Enviva Inc. Mr. Leuschen is the Co-Founder and Senior Managing Director of Riverstone. He sits on the Investment Committees of all the various Riverstone investment vehicles. Prior to co-founding Riverstone in 2000, Mr. Leuschen was a Partner and Managing Director at Goldman Sachs and founder and head of the Goldman Sachs Global Energy and Power Group. Mr. Leuschen was responsible for building the Goldman Sachs energy and power investment banking practice into one of the leading franchises in the global energy and power industry. Mr. Leuschen additionally served as Chairman of the Goldman Sachs Energy Investment Committee, where he was responsible for screening potential direct investments by Goldman Sachs in the energy and power industry. Mr. Leuschen has served as a director of Cambridge Energy Research Associates, Cross Timbers Oil Company (predecessor to XTO Energy), Canadian Non-Operated Resources, L.P. (predecessor to Pipestone Energy Corp.), Decarbonization Plus Acquisition Corporation II (predecessor to Tritium DCFC Limited), Decarbonization Plus Acquisition Corporation III (predecessor to Solid Power, Inc.), and J. Aron Resources. He currently serves on the boards of directors of Riverstone Energy Limited and, Centennial Energy Development. He is also president and sole owner of Switchback Ranch LLC and on the Advisory Board of Big Sky Investment Holdings LLC. Mr. Leuschen serves on a number of nonprofit boards of directors, including as a Trustee of United States Olympic Committee Foundation, a Director of Conservation International, a Director of the Peterson Institute for International Economics, a Founding Member of the Peterson Institute’s Economic Leadership Council, a Director of the Wyoming Stock Growers Association, and a Director of the Montana Land Reliance. Mr. Leuschen received his A.B. from Dartmouth and his M.B.A. from Dartmouth’s Amos Tuck School of Business. We believe that Mr. Leuschen’s considerable energy, private equity, and investment banking experience bring important and valuable skills to our board of directors.
Jeffrey W. Ubben. Mr. Ubben joined the board of directors of the general partner of Enviva Partners, LP in June 2020 and has continued to serve as a member of the board of directors of Enviva Inc. Mr. Ubben is a Founder, Managing Partner, and member of the Management Committee of Inclusive Capital Partners.Partners, a San Francisco-based investment firm which partners with companies that enable solutions to address environmental and social problems. Mr. Ubben is a retired Founder of ValueAct Capital, where he was Chief Executive Officer, member of the Management Committee, Chief Investment Officer, and Portfolio Manager. Mr. Ubben also founded and serves as Portfolio Manager of the ValueAct Spring Fund. Prior to founding ValueAct Capital in 2000, Mr. Ubben was a Managing Partner at Blum Capital Partners for more than five years. Mr. Ubben is a director of AppHarvest, Fertiglobe, ExxonMobil Corporation, and Nikola Corporation. Mr. Ubben is a former director of The AES Corporation, where he iswas a member of the Compensation and Financial Audit Committees, AppHarvest, and Nikola Corporation.Committees. He is the former chairman and director of Martha Stewart Living Omnimedia, Inc., and a former director of Catalina Marketing Corp., Gartner Group, Inc., Mentor Corporation, Misys plc, Sara Lee Corp., Twenty-First Century Fox Inc., Valeant Pharmaceuticals International, Willis Towers Watson plc, and several other public and private companies. In addition, Mr. Ubben serves on the boards of Duke University, The Nature Conservancy’s NatureVest,World Wildlife Fund, The Redford Center, and the E.O. Wilson Biodiversity Foundation, and formerly served as Chair of the National Board of the Posse Foundation for nine years. He has a B.A. from Duke University and an M.B.A. from the Kellogg School of Management at Northwestern University. Mr. Ubben’s experience in capital allocation across different industries and strategic thinking will be invaluable to Enviva as the Company seeks to increase stockholder value by enhancing its ESG credentials while playing a leadership role in the energy transition.
Gary L. Whitlock. Mr. Whitlock joined the board of directors of the general partner of Enviva Partners, LP in April 2016 and has servedcontinued to serve as a director onmember of the Board since April 2016.board of directors of Enviva Inc. Mr. Whitlock served as Executive Vice President and Chief Financial Officer of CenterPoint Energy, Inc. (“CenterPoint”) from September 2002 until April 2015. From April 2015 until his retirement on October 1, 2015, he served as Special Advisor to the Chief Executive Officer of CenterPoint. While at CenterPoint, Mr. Whitlock was responsible for accounting, treasury, risk management, tax, strategic planning, business development, emerging businesses, and investor relations. From July 2001 to September 2002, Mr. Whitlock served as Executive Vice President and Chief Financial Officer of the Delivery Group of Reliant Energy, Incorporated (“Reliant”). Prior to joining Reliant, Mr. Whitlock served as Vice President of Finance and Chief Financial Officer of Dow AgroSciences LLC, a subsidiary of The Dow Chemical Company (“Dow”), from 1998 to 2001. He began his career with Dow in 1972, where he held a number of financial leadership positions, both in the United States and globally. While at Dow, Mr. Whitlock served on the boards of directors of various Dow entities. Mr. Whitlock is a Certified Public Accountant and received a BBA in accounting from Sam Houston State University in 1972. He has previously served on the board of directors of Texas Genco Holdings, Inc., the board of directors of the general partner of Enable Midstream Partners, LP from March 2013 to August 2015, the board of directors of KiOR, Inc. from December 2010 to June 2015, the board of directors of CHI St. Luke’s Health System, The Woodlands, and the Leadership Cabinet of Texas Children’s Hospital. Mr. Whitlock brings extensive experience in public company financial management and reporting to the Board.board of directors of our Company.
Janet S. Wong. Ms. Wong joined the board of directors of the general partner of Enviva Partners, LP in April 2015 and has servedcontinued to serve as a director onmember of the Board since April 2015. Since January 2013, Ms. Wongboard of directors of Enviva Inc. She is a licensed Certified Public Accountant and has served asmore than 30 years of public accounting experience. She is a National Executive Advisor for Ascend, a non‑profitpartner (retired) with KPMG, an international professional organization that enables its members, corporate partners
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services firm, where she gained extensive industry experience in technology, manufacturing, energy, financial services, and the community to realize the leadership potential of Asians in global corporations. At Ascend, Ms. Wong has led the largest network of Asian corporate board directors and is recognized as a global thought leader on leadership and diversity issues.consumer products. Currently, Ms. Wong serves on the board of Lucid Group, Inc., a technology manufacturer of electric vehicles and energy storage, where she is Chair of the Audit Committee, Lumentum Holdings Inc., a market-leading high technology manufacturer of innovative optical and photonics products, where she is a member of the Audit Committee, and the board of Allegiance Bancshares, Inc., a financial services company, where she is a member of the Audit Committee and the Corporate Governance and Nominating Committee. In addition, she servesis on the non-profit boardsBoard of Trustees for the Computer History Museum, the Board of the Louisiana Tech University Foundation, and the Thirty Percent Coalition. Ms. Wong served as a Partner at Grant Thornton LLP from August 2008 through July 2012, where she wasBoard of the Central RegionTri-Cities Chapter of the National Association of Corporate and Partnership Services Lead Partner. In 2008, Ms. Wong retired from the partnership of KPMG, culminating a career with the global firm from 1985 through 2008, where she served as a National Industry Practice Lead Partner. Ms. Wong has extensive experience working with clients in the consumer markets, energy, financial services, manufacturing, and technology sectors. She is a Certified Public Accountant.Directors. She holds a Master of Professional Accountancy from Louisiana Tech University and a Master of Taxation from Golden Gate University. She is a NACD (National Association of Corporate Directors) Certified® Director. We believe Ms. Wong’s audit and financial expertise as well as her leadership and her professional and leadershipgovernance experience enable her to provide essential guidance to the Boardboard of directors of our Company and our management team.
Eva T. Zlotnicka. Ms. Zlotnicka joined the board of directors of Enviva Inc. in December 2021. She is a Founder, Managing Partner, President, and member of the Management Committee of Inclusive Capital Partners, a San Francisco-based investment firm that partners with companies that enable solutions to address environmental and social problems. Before founding Inclusive Capital Partners, she was a Founder and Managing Director of the ValueAct Spring Fund and Head of Stewardship at ValueAct Capital. Prior to joining ValueAct Capital in 2018, Ms. Zlotnicka spent more than ten years on the sell side. Most recently, she was U.S. lead Sustainability and Environmental, Social and Governance (E.S.G.) equity research analyst at Morgan Stanley. Ms. Zlotnicka is a director of Unifi, Inc., where she serves on the Audit Committee and serves as chairman for the Corporate Governance and Nominating Committee. Ms. Zlotnicka was previously a director of Hawaiian Electric Industries, where she was a member of the Compensation Committee. Ms. Zlotnicka also serves as a member of the Investor Advisory Group for the Sustainability Accounting Standards Board (SASB) and is a member of the Advisory Board of the Institute for Corporate Governance and Finance at N.Y.U. Law. Ms. Zlotnicka also co-founded Women Investing for a Sustainable Economy (WISE), a global professional community. She has two B.S.c. degrees from the University of Pennsylvania, including one from the Wharton School, and an M.B.A and a Master of Environmental Science degree from Yale University. We believe that Ms. Zlotnicka’s experience in sustainable investing and deep background in environmental and social issues will serve as a valuable resource to the board of directors.
Director Independence
TheAll members of our Board has fiveexcept Mr. Keppler are independent directors: John C. Bumgarner, Jr., William K. Reilly, Jeffrey W. Ubben, Gary L. Whitlock and Janet S. Wong. The NYSE does not require a publicly traded partnership such as ourspursuant to have a majority of independent directors on the board or to establish a compensation committee or a nominating committee. However, our General Partner is required to have an audit committee of at least three members, and all its members are required to meet the independence and experience standards established by the NYSENew York Stock Exchange (the “NYSE”) and the Securities Exchange Act.Act of 1934, as amended (the “Exchange Act”).
Committees of the Board of Directors
The Board has threefour standing committees: an audit committee, a compensation committee, and a health, safety, sustainability, and environmental committee, and a nominating and corporate governance committee. The Board may also form a conflicts committee from time to time.
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met seven times in 2021.
Audit Committee
WeResponsibilities of the audit committee, which are required to haveset forth in the Audit Committee Charter posted on the Company’s website include, among other duties, assisting the Board in fulfilling its oversight responsibilities regarding:
the integrity of our financial statements,
compliance with legal and regulatory requirements and corporate policies and controls,
qualifications, independence, and performance of our independent registered public accounting firm engaged for the purpose of preparing or issuing an audit committeereport or performing other audit, review or attest services for the Company, and
effectiveness and performance of at least three members, and all the Company’s internal audit function.
The members of the audit committee are required to meet the independence and experience standards established by the NYSE and the Exchange Act. Mr. Bumgarner, Mr. Whitlock, and Ms. Wong, currently servewith Ms. Wong serving as members of the audit committee. The Board determined that all members ofChairperson. In addition, the audit committee are financially literate and are “independent” under the standards of the NYSE and SEC regulations currently in effect. SEC rules also require that a public company disclose whether or not its audit committee has an “audit committee financial expert” as a member. An “audit committee financial expert” is defined as a person who, based on his or her experience, possesses the attributes defined by Regulation S-K Item 407(d)(s)(ii). The Board believes Ms. Wong satisfies the definition of “audit committee financial expert.”
The audit committee assists the Board in its oversightmet five times during 2021.
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Table of the integrity of our financial statements and our compliance with legal and regulatory requirements and partnership policies and controls. The audit committee has the sole authority to (1) retain and terminate our independent registered public accounting firm, (2) approve all auditing services and related fees and the terms thereof performed by our independent registered public accounting firm and (3) pre-approve any non‑audit services and tax services to be rendered by our independent registered public accounting firm. The audit committee is also responsible for confirming the independence and objectivity of our independent registered public accounting firm. Our independent registered public accounting firm has been given unrestricted access to the audit committee and our management.Contents
Compensation Committee
As a limited partnership listedResponsibilities of the compensation committee, which are set forth in the Compensation Committee Charter that is posted on the NYSE, we are notCompany’s website include, among other duties, the responsibility to:
review, evaluate, and approve the agreements, plans, policies, and programs of the Company to compensate the Company’s directors and executive officers,
review and discuss with the Company’s management the Compensation Discussion and Analysis required by SEC regulations, and
otherwise discharge the Board’s responsibilities relating to have a compensation committee. However,of the Company’s directors and executive officers.
The compensation committee is delegated all authority of the Board has established aas may be required or advisable to fulfill its purposes. The compensation committee consistingmay delegate to any one of Mr. Alexander, Mr. Bumgarnerits members or any subcommittee it may form, the responsibility and Mr. Ubben to, among other things, administer our long-term incentive plan and establish and review general policies related to, and determine and approve, or make recommendations to the Board with respect to, the compensation and benefits of the non‑employee members of the Board.
Conflicts Committee
Our Board may,authority for any particular matter, as it deems appropriate from time to time establish a conflictsunder the circumstances.
The compensation committee may retain and determine funding for legal counsel, compensation consultants, as well as other experts and advisors (collectively, “Committee Advisors”), including the authority to whichretain, approve the Board will appoint at least one directorfees payable to, amend the engagement with, and which may be askedterminate any Committee Advisor, as it deems necessary or appropriate to review specific matters thatfulfill its responsibilities. The Compensation Committee assesses the Board believes may involve conflictsindependence of interestany Committee Advisor prior to retaining such Committee Advisor, and determines to submit to the conflicts committee for review. The conflicts committee determines if the resolution of the conflict of interest is adverse to the interest of the partnership. on an annual basis thereafter.
The members of the conflictsCompensation Committee are Mr. Bumgarner, Mr. Lapeyre, and Mr. Ubben, with Mr. Bumgarner serving as the Chairperson.
The compensation committee may not be officers or employeesmet five times during 2021.
Nominating and Corporate Governance Committee
Responsibilities of our General Partner or directors, officers or employeesthe nominating and corporate governance committee, which are set forth in the Nominating and Corporate Governance Committee Charter that is posted on the Company’s website include, among other duties, the responsibility to:
advise the Board, make recommendations regarding appropriate corporate governance practices, and assist the Board in implementing those practices,
identify individuals qualified to become members of its affiliates, including our sponsor, and must meet the independence standards established byBoard, consistent with the NYSE and the Exchange Act to serve on an audit committee of a board of directors, along with other requirements in our partnership agreement.
Any matterscriteria approved by the conflictsBoard,
select and recommend to the Board for approval director nominees for election at the annual meetings of stockholders or for appointment to fill vacancies, and
oversee the evaluation of the Board and management.
The members of the nominating and corporate governance committee will be conclusively deemed to be approved by usare Mr. Alexander, Mr. Lakhani, and all of our partnersMs. Wong, with Mr. Alexander serving as the Chairperson.
The nominating and corporate governance committee was formed upon the Conversion on December 31, 2021; as such, it did not a breach by our General Partner of any duties it may owe us or our unitholders.meet in 2021.
Health, Safety, Sustainability, and Environmental Committee
The Board has established aResponsibilities of the health, safety, sustainability, and environmental committee (the “HSSE committee”) consisting of Mr. Lansing, Mr. Reilly, which are set forth in the Health, Safety, Sustainability, and Mr. Ubben. The HSSE committee assistsEnvironmental Committee Charter that is posted on the Company’s website, include, among other duties, assisting the Board in fulfilling its oversight responsibilities with respect to the Board’s and our continuing commitment to (1) to:
ensuring the safety of our employees and the public and assuring that our businesses and facilities are operated and maintained in a safe and environmentally sound manner, (2) 
sustainability, including sustainable forestry practices, (3) 
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delivering environmental benefits to our customers, the forests from which we source our wood fiber, and the communities in which we operate, and (4)
minimizing the impact of our operations on the environment.
The HSSE committee reviews and oversees our health, safety, sustainability, and environmental policies, programs, issues, and initiatives, reviews associated risks that affect or could affect us, our employees, and the public, and ensures proper management of those risks and reports to the board on health, safety, sustainability, and environmental matters affecting us, our employees, and the public.
The members of the HSSE committee are non‑employee directors of our General Partner.Mr. Davidson, Mr. Lansing, and Ms. Zlotnicka, with Ms. Zlotnicka serving as the Chairperson.
The HSSE committee met three times during 2021.
Executive Sessions of Non-Management Directors
The Board holds regular executive sessions in which the non-management directors meet without any members of management present. The purpose of these executive sessions is to promote open and candid discussion among the non-management directors. In the event that the non-management directors include directors who are not independent under the listing requirements of the NYSE, then at least once a year, there will be an executive session including only independent
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directors. The director who presides at these meetings is John C. Bumgarner, Jr. UnitholdersStockholders and any other interested parties may communicate directly with the presiding director or with the non-management directors as a group, by mail addressed to:
Presiding Director c/o General Counsel
Enviva Partners, LPInc.
72007272 Wisconsin Avenue, Suite 10001800
Bethesda, Maryland 20814
Communication with the Board of Directors
As set forth in the Communications Policy adopted by the Board, a holder of our unitsA stockholder or other interested party who wishes to communicate with any director of our General Partner may do so by sending communications to the Board, any committee of the Board, the Chairman of the Board, or any other director to:
General Counsel
Enviva Partners, LPInc.
72007272 Wisconsin Avenue, Suite 10001800
Bethesda, Maryland 20814
and marking the envelope containing each communication as “Unitholder“Stockholder Communication with Directors” and clearly identifying the intended recipient(s) of the communication. Communications will be relayedComments or complaints relating to the intended recipientCompany’s accounting, internal accounting controls, or auditing matters will also be referred to members of the Board pursuant to the Communications Policy, which is available on the “Investor Relations” section of our website at www.envivabiomass.com. Any communications withheld under the Communications Policy will nonetheless be recorded and available for any director who wishes to review them.Audit Committee.
Corporate Governance
Our General Partner hasWe have adopted a Code of Business Conduct and Ethics that applies to our General Partner’s directors, officers, and employees, as well as to employees of our subsidiaries or affiliates that perform work for us. The Code of Business Conduct and Ethics also serves as the financial code of ethics for our Chief Executive Officer, Chief Financial Officer, controller, and other senior financial officers. Our General Partner hasWe have also adopted Corporate Governance Guidelines that outline the important policies and practices regarding our governance.
We make available free of charge, within the “Investor Relations” section of our website at www.envivabiomass.com and in print to any interested party who so requests, our Code of Business Conduct and Ethics, Corporate Governance Guidelines, Audit Committee Charter, Compensation Committee Charter, HSSE Committee Charter, and HSSENominating and Corporate Governance Committee Charter. Requests for print copies may be directed to Investor Relations, Enviva Partners, LP, 7200Inc., 7272 Wisconsin Ave., Suite 1000,1800, Bethesda, Maryland 20814, or by telephone at (301) 657‑5560. We will post on our website all waivers to or amendments of the Code of Business Conduct and Ethics, which are required to be disclosed by applicable law and the listing requirements of the NYSE. The information contained on, or connected to, our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered part of this or any other report we file with or furnish to the SEC.
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ITEM 11.    EXECUTIVE COMPENSATION
Compensation Discussion & Analysis
Background and Business Highlights for 2021
This Compensation Discussion and Analysis (“CD&A”) explains the 20202021 executive compensation program for the Named Executive Officers (the “NEOs”) identified below. The CD&A will discuss the impact of the Simplification Transaction and Conversion upon our executive compensation program for the 2021 year, including by indicating where the entity responsible for making compensation decisions, changed during the year. Accordingly, the period from January 1, 2021 to the closing of the Simplification Transaction, which occurred on October 14, 2021, will be referred to as the “Pre-Simplification Period,” and the period following the Pre-Simplification Period through December 31, 2021, the date of the Conversion, will be referred to as the “Post-Simplification Period.” Our executive compensation program was administered largely by Enviva Management Company, LLC (“Enviva Management Company”), a wholly owned subsidiary of our former sponsor, during the Pre-Simplification Period. The CD&A concludes with a description of the elements of our compensation program that remained unchanged during the entirety of the 2021 calendar year as they were not materially impacted by either the Simplification Transaction or the Conversion. Throughout this CD&A, references to “Enviva,” “we,” and “our” will refer to our predecessor, Enviva Partners, LP (the “Partnership” or the “Predecessor”), or Enviva Inc., as appropriate for the context. Similarly, references to our “shareholders” or “shares” refer to our “shareholders” or “units,” as applicable, during the period prior to the Conversion. Please read this CD&A together with the tables and related narrative about executive compensation that follow.
The table below lists our NEOs in 20202021 whose compensation is described in this CD&A:
ExecutiveTitle
John K. KepplerChairman of the Board of Directors, President and Chief Executive Officer
Shai S. EvenExecutive Vice President and Chief Financial Officer
Thomas MethExecutive Vice President Sales and MarketingChief Commercial Officer
William H. Schmidt, Jr.Executive Vice President, Corporate Development and General Counsel
E. Royal SmithExecutive Vice President, Operations
As a publicly traded partnership, our employment and compensation structure is different from that of a typical public corporation. Neither we nor our General Partner have any employees. Instead, our employees, including our NEOs, are employed by Enviva Management Company, LLC and its affiliates who provide services to the Partnership and the affiliates of our sponsor (collectively, “Enviva Management Company”). As each of our NEOs has been appointed to serve as an executive officer of our General Partner, throughout this CD&A we will refer to them as our NEOs.
We are party to management services agreements (the “MSAs”) with Enviva Management Company, pursuant to which Enviva Management Company provides us with employment and management services necessary for the operation of our business.Although our NEOs’ salaries and bonuses are paid, and benefits are provided, directly by Enviva Management Company, we partially reimburse Enviva Management Company based on the cost allocated to us for each NEO pursuant to the MSAs. Other than with respect to equity-based awards that may be granted pursuant to the Enviva Partners, LP Long-Term Incentive Plan (“LTIP”), Enviva Management Company generally has all responsibility and authority for compensation‑related decisions for the NEOs, and such decisions are not subject to approval by our General Partner’s board of directors or the Compensation Committee of our General Partner (the “Compensation Committee”). For a more detailed description of the MSAs and our relationship with Enviva Management Company, see Item 13. “Certain Relationships and Related Transactions, and Director Independence—Other Transactions with Related Persons—Management Services Agreements” in this Annual Report.
This CD&A describes key features of our executive compensation program and summarizes the 2020 cash and LTIP compensation and other benefits received by our NEOs. Although we do not make decisions regarding the base salaries paid, or annual cash incentive awards pursuant to the Enviva Management Annual Incentive Compensation Plan (the “AICP”) made, to our NEOs by Enviva Management Company, this CD&A describes each element of compensation for which we are responsible for partially reimbursing Enviva Management Company pursuant to the MSAs. The descriptions of such compensation elements have been provided to us by Enviva Management Company and reflect the philosophy and decisions of Enviva Management Company. Unless otherwise specifically noted, the quantification of these compensation elements within this CD&A and the tables that follow reflect the portion of compensation allocated to us for the 2020 calendar year pursuant to the MSAs.
Highlights
Enviva Management Company’sOur executive compensation philosophy seeks to tie compensation to our financial and operating performance. Specifically, the executive compensation program includes various performance metrics for NEOs that are closely aligned with financial returns to our unitholderssecurityholders and are designed to result in annual and long-term value creation. The performance goals established in the NEOs’ compensation plans are aggressive, and potential awards are intended to provide them an opportunity to earn above-median rewards in return for achieving such aggressive goals.
The 2021 year was a transformative year for us: we continued to operate our growing portfolio of fully contracted wood pellet facilities and deep-water marine terminals while managing the impact of the evolving COVID-19 pandemic on labor, safety, and supply chains and maintaining our role as a leader in sustainability in pursuit of our mission to displace coal, grow more trees, and fight climate change. During the year, we acquired a new wood pellet production plant and a new deep-water marine terminal and completed the Simplification Transaction under which we bought in the General Partner of Enviva Partners, LP, eliminating its incentive distribution rights, and converted from a master limited partnership to a corporation. In addition, as of February 1, 2022, our backlog of fully contracted volumes under our existing take-or-pay contracts is $21.2 billion with a weighted-average remaining term of 14.5 years, as well as a $40+ billion customer contract pipeline, providing for substantial potential future growth for the Company. We also returned $3.30 per share to holders of our common shares in distributions and dividends while maintaining robust liquidity and financial leverage well within the covenants of our debt agreements. The markets responded favorably to these accomplishments. Even after accounting for the approximately 21 million shares of primary equity issued during the course of 2021, which expanded our total shares outstanding by approximately 52%, we closed the year with a 64% total shareholder return (“TSR”), compared to a 29% TSR for the S&P 500 Index and 40% for the Alerian Index.
Track Record of Strong Performance
Enviva Management Company believesWe believe that the combination of the three primary components of our executive compensation program (annual base salary, annual cash incentive under the AICP, and long-term equity incentive under the LTIP), coupled with aggressive goal settinggoal-setting and a pay-for-performance culture, has enabled the PartnershipCompany to deliver strong historical results and weresults. We expect to continue this trend into the future.
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In 2020,2021, we achieved our lowesta total recordable incident rate (“TRIR”) inof less than 1.0, which is less than half of the Partnership’s history,national average for our industry, and substantially reduced certain process and safety risks while confronting a global health pandemic that required us to make adjustments to our daily operations to ensure we could continue to run our plants and terminals in a safe, stable, and reliable manner while maintaining a healthy workforceworkforce. As a result, we were able to increase Enviva’s annual adjusted EBITDA by 19% over the prior period and grew its cash distributed to shareholders by 36% over the previous year. In addition, Enviva added over $6 billion to its fully contracted revenue backlog, extending its weighted average remaining contract term by approximately 2 years to 14.5 years and entered agreements with new customers, in the facenew geographies and with new product use cases. Enviva’s 2021 TSR of a rapidly spreading novel coronavirus. Against the particularly challenging economic and operating backdrop due to COVID-19, we achieved-record distributable cash flow attributable to Enviva Partners, LP (“DCF”) of $141.4 million, an increase of 44% over 2019 DCF of $98.5 million. For the 3-year period ended December 31, 2020, Enviva’s DCF increased at a compound annual growth rate (“CAGR”) of 28%. For the 5-year period ended December 31, 2020, Enviva’s DCF increased at a CAGR of 18%. Enviva’s 2020 total unitholder return (“TSR”) of 31%64% outperformed the TSR of the Alerian Index of -29%40% and the TSR of the S&P 500 Index of 18%29%. For the 3-year period ended December 31, 2020,2021, Enviva’s TSR of 110%215% outperformed the TSR of the Alerian Index of -33%6% and the TSR of the S&P 500 of 49%100%. For the 5-year period ended December 31, 2020,2021, Enviva’s TSR of 278%285% outperformed the TSR of the Alerian Index of -26%-13% and the TSR of the S&P 500 Index of 103%133%.
In addition to the directly observable strong financial performance, we also continued to build a fully contracted product sales backlog that now totals $14.6 billion and has a weighted-average remaining term of 12.8 years from February 1, 2021, providing for substantial potential future growth for the Partnership. In 2020, we successfully completed two transformative acquisitions that increased our production capacity by more than 35% and added $5.3 billion to our product sales backlog, all as we continued to maintain our role as a leader in sustainability in pursuit of our mission to displace coal, grow more trees and fight climate change.
Enviva Financial Highlights
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(1)TSR includes unitshare price appreciation and distributions paid.
(2)DCF is not a specific financial measure calculated in accordance with GAAP.
Administration of the Executive Compensation Program
As a publicly traded partnership, we did not have any employees. Instead, our employees, including our NEOs, were employed by Enviva Management Company.
The Partnership was party to management services agreements (the “MSAs”) with Enviva Management Company, pursuant to which Enviva Management Company provided us with employment and management services necessary for the operation of our business during the Pre-Simplification Period. Although our NEOs’ salaries and bonuses were paid, and benefits were provided, directly by Enviva Management Company, we partially reimbursed Enviva Management Company based on the cost allocated to us for each NEO pursuant to the MSAs. Other than with respect to equity-based awards that were granted pursuant to the Enviva Partners, LP Long-Term Incentive Plan (“LTIP”), Enviva Management Company generally had all responsibility and authority for compensation‑related decisions for the NEOs, and such decisions were not subject to approval by the board of directors or the Compensation Committee (the “Compensation Committee”) of our former general partner (the “former GP”). For a more detailed description of the MSAs and our relationship with Enviva Management Company, see Item 13. “Certain Relationships and Related Transactions, and Director Independence-Other Transactions with Related Persons-Management Services Agreements” in this Annual Report.
The information provided below describes key features of our executive compensation program and summarizes the 2021 cash and LTIP compensation and other benefits received by our NEOs for full-year 2021 on an unallocated basis, even though we were only responsible for partially reimbursing Enviva Management Company pursuant to the MSAs for such compensation and benefits during the Pre-Simplification Period. We are disclosing full, unallocated NEO compensation for fiscal year 2021 because we believe that such disclosure will provide greater comparability to future periods.
Although Enviva Management Company established our NEOs’ base salaries and designed the annual cash incentive award program, we continue to believe that such compensation elements are appropriate and reflect the philosophy of Enviva; accordingly, unless otherwise indicated, we refer to such compensation elements as “ours.”
Executive Compensation Elements Support Our Philosophy and Strategy
Enviva Management Company’sOur executive compensation philosophy seeks to tie compensation to our financial and operating performance goals. Specifically, the 2021 executive compensation program isincluded various performance metrics for our NEOs that were closely aligned with financial returns to our shareholders and were designed to result in annual and long-term value creation. The performance goals established in the NEOs’ compensation plans were aggressive, and potential awards were intended to provide them an opportunity to earn above-median rewards in return for achieving such aggressive goals.
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Our executive compensation program was designed to attract, retain, reward, and motivate high-performing executive leadership whose talent and expertise enable us to create long-term unitholdershareholder value, not only on an absolute basis but also relative to our peers. TheFurthermore, given that we sit at the forefront of a relatively new and rapidly evolving industry, our success depends in large part on retaining the unique skill sets that our NEOs have developed during their tenure with the Company.Against that backdrop, our executive compensation program consists of three primary components, described below, that containcontained a substantial portion of at-risk, performance-based compensation, incorporateincorporated our financial and operational results, and alignaligned our NEOs’ interests with those of our unitholdersshareholders with the ultimate objective of increasing long-term unitholdershareholder value.
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Key Focus of the Compensation Program
Competitive compensation opportunities
Providing competitive compensation opportunities iswas a key factor in allowing us to attract and retain the caliber of executives we needneeded to deliver on the aggressive performance goals established under the incentive compensation arrangements in which our executives participate.NEOs participated.
Among other factors, each NEO’s 20202021 target total direct compensation was determined with reference to market data reflecting executive pay levels among our peer companies and survey data taken from the broader market.
NEO compensation is designed to drive and reward long-term growth in unitholdershareholder value
All NEOs’ 20202021 compensation included a significant equity compensation component under the LTIP.
50% of each NEO’s equity compensation iswas designed to be earned based on achievement of aggressive DCF growthtotal shareholder return targets a key driver of growthrelative to companies in unitholder value over the long-term.S&P500.
UnitholderShareholder alignment iswas further supported by robust ownership guidelines that encourageencouraged a long-term ownership culture among our NEOs.
In 2020, equity awards to NEOs were subject to a combination of 3-year and 4-year cliff vesting schedules (as compared to our prior practice of solely utilizing a 3-year schedule). In an effort to further enhance retention and more closely align the LTIP with longer-term unitholder interest, our NEOs were transitioned to equity-based awards that had a 4-year cliff vesting schedule and an additional TSR modifier for all LTIP grants beginning in 2021.addition to distributable cash flow goals.
Enviva Management Company sets aggressiveAggressive performance goals
Aggressive performance goals for incentive-based compensation requirerequired exceptional organizational and individual performance, which is the kind of performance we expectexpected from our NEOs.
Performance at or above these goals should producehave produced aggregate NEO compensation in the top quartile when compared to the competitive market.
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As evidence of the difficulty of meeting our aggressive goals, our NEOs have received, on average, an 89%91.6% payout against target compensation under the AICP and LTIP during the last three years, even as the Partnership’s TSR significantly outperformed that of the Alerian and S&P 500 Indices.
CommittedCommitment to best practices
Significant At-Risk, Variable Compensation: A significant percentage of annual compensation iswas at-risk, variable and performance-based, such as AICP awards and certain LTIP awards.
No Guaranteed Bonuses: We dodid not have in place any annual or multi-year bonus or incentive guarantees for the NEOs.
No Gross-Ups: No tax gross-ups upon a change in control or with respect to Code Section 409A matters.
No Individual Supplemental Executive Retirement Plans: There arewere no executive retirement plans that arewere different from the ones offered to the broader employee population.
No Excessive Perquisites: We dodid not offer excessive perquisites to our NEOs.
No Hedging or Pledging Units:Hedging: Our Insider Trading Policy prohibits, among other things, hedging and pledging transactions relating to our units.common stock.
Independent Compensation Consultant: Enviva Management Company has engaged an independent compensation consultant the(the “Compensation Consultant”) to assist with Enviva Management Company’s and the Compensation Committee’s regular review of our executive compensation program.
2020
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2021 NEO Compensation
Compensation Strategy and Philosophy
The aim of Enviva Management Company’s executive compensation program is to retain highly skilled and talented leaders to manage and grow our sponsor’s and the Partnership’s businesses. Furthermore, given that we sit at the forefront of a relatively new and rapidly evolving industry, our success depends in large part on retaining the unique skill sets that our NEOs have developed during their tenure with the Company.
Process for Determining Executive Compensation
As discussed above, Enviva Management Company iswas generally responsible for developing and administering the executive compensation program. Enviva Management Company also providesprovided the Compensation Committee with access to the Compensation Consultant and relevant data in order for the Compensation Committee to have a fulsome picture of the NEOs’ compensation levels as compared to peers when it and the Board make final LTIP award decisions.for decision-making purposes.
Role of Compensation Consultant
Enviva Management Company retainsengaged an independent compensation consultant to advise on matters related to executive and non-employee director compensation. In 2019 and during part of 2020, Longnecker & Associates (“Longnecker”) wasWhen determining compensation for the Compensation Consultant. In August 2020,upcoming 2021 year, Enviva Management Company transitioned the consulting engagement toengaged Meridian Compensation Partners, LLC (“Meridian”). in August 2020.
For 2020, the scope of Longnecker’s services included provision of executive compensation benchmarking data used to inform 2020 compensation actions, and2021, the scope of Meridian’s engagement included a review of our peer group and an executive compensation analysis based on an updated peer group. Neither Longnecker nor Meridian did not have authority to make decisions regarding compensation and serveserved solely in an advisory role.
Peer Group and Market Data
Neither peer group data nor broader employment market survey data iswas a prescription for program design or individual pay levels for Enviva Management Company or ourthe Compensation Committee. Peer data, in combination with broader market survey data, providesprovided a reference point for competitive pay rates and program design for our NEOs. Each year, in cooperation with the Compensation Consultant, Enviva Management Company reviewsreviewed the peer group used for the prior year and determinesdetermined what modifications, if any, would be appropriate for the upcoming year. Factors considered in selecting peers includeincluded operations in related industry sectors, comparable market capitalization and revenues, similarity of business strategy and availability and clarity of publicly filed compensation data. We also considerconsidered companies tracked as peers of ours by the investment community, although these companies may or may not ultimately behave been included in our peer group for presentation herein. For instance, to supplement the executive compensation information derived from our peer group, Enviva Management
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Company has also considered, on a limited basis, available compensation data from NextEra Energy Partners, LP (“Nextera”NextEra”). Although similar to us in business focus and structure, NextEra was not formally identified as a peer company for compensation benchmarking purposes due to the lack of available comprehensive pay data. In the peer group review process, we maywould also consider the impact of mergerssimplifications or other corporate-level transactions that havehad occurred during the past year.
In October 2019, Enviva Management Company reviewed the peer group to be used for 2020 compensation decisions. The Compensation Consultant advised that the peer group used for 2019 compensation decisions was largely still appropriate for comparison purposes and Enviva Management Company made minimal changes to the group. The peer group adopted as a comparison group for 2020 compensation consisted of the following eleven companies:
Peer Group (Approved October 2019)
Bloom Energy CorporationRayonier Advanced Materials Inc.
CatchMark Timber Trust, Inc.Rayonier Inc.
CrossAmerica Partners LPSummit Midstream Partners, LP
Hi-Crush Inc.SunCoke Energy, Inc.
Pattern Energy Group Inc.USA Compression Partners, LP
PotlatchDeltic Corporation
In October 2020, Enviva Management Company reviewed the peer group listed above and determined that certain changes to the list would be appropriate for 2021 compensation decisions, including as a result of bankruptcy filings, changes to business models and changes to market capitalization levels within the previous peer group. The revised peer group of fourteen companies, listed below, will provide aprovided an appropriate reference point for considering the compensation arrangements for our NEOs in 2021. In November 2021, after discussions with Meridian, the peer list was re-approved for the general purposes of doing market comparison analysis for the upcoming year, although supplemental compensation data was also considered through general industry surveys provided by Meridian. The peer group is expected to be reviewed again in 2022 to determine if the list below should be modified to reflect the impact of the Simplification and the Conversion for 2023.
2021 Peer Group (Approved October 2020)
Atlantica Sustainable Infrastructure plcOrmat Technologies, Inc.
CatchMark Timber Trust, Inc.PotlatchDeltic Corporation
Cheniere Energy, Inc.Rayonier Advanced Materials Inc.
Crestwood Equity Partners LPRayonier Inc.
Delek US Holdings, Inc.SunCoke Energy, Inc.
Green Plains Inc.TPI Composites, Inc.
HanonHannon ArmstrongUSA Compression Partners, LP
Key Elements of the 2020 Executive Compensation Program
The following discussion provides details regarding the three primary elements of the 20202021 compensation program set for our NEOs: base salary, AICP awards, and LTIP awards. Our NEOs also receivereceived certain customary health, welfare, and retirement plan benefits from Enviva Management Company that are briefly described below.
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Base Salary
Each NEO’s base salary iswas a fixed component of annual compensation and iswas set out in such NEO’s employment agreement with Enviva Management Company. Enviva Management Company makesmade all final decisions regarding the NEOs’ salaries based on a review of the specific job duties and functions, individual NEO expertise, and the relative competitiveness of the NEO’s compensation compared to our peers and to the market survey data. BelowEnviva Management Company increased the base salaries for each NEO from 2020 to 2021 by the following percentages: Mr. Keppler, 10.3%; Mr. Even 3.1%; Mr. Meth, 10.4%; Mr. Schmidt, 4.7%; and Mr. Smith, 4.2%. While the base salaries reported in previous filings reported only the portion of the base salary that was allocated to us pursuant to the MSAs, below are the full amounts allocated toof the Partnership with respect to 2019 and 2020 NEO annual base salaries asset for each NEO for the 2021 year pursuant to such NEOs’ then-current employment agreements:
Name2021 Annual Base Salary
John K. Keppler$800,000 
Shai S. Even464,000 
Thomas Meth425,000 
William H. Schmidt, Jr.445,000 
E. Royal Smith370,000 
Base salaries for each of the NEOs for December 31 of each such year, to1, 2021 onward were set at the extentfollowing levels in the individual was a “NEO” for that year:most recent employment agreements (as discussed below):
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NameAllocable 2020 Annual Base SalaryAllocable 2019 Annual Base Salary
John K. Keppler$182,838 $170,885 
Shai S. Even112,796 109,614 
Thomas Meth97,097 — 
William H. Schmidt, Jr.85,339 — 
E. Royal Smith249,389 238,606 
Name2022 Annual Base Salary
John K. Keppler$1,000,000 
Shai S. Even490,000 
Thomas Meth500,000 
William H. Schmidt, Jr.475,000 
E. Royal Smith392,200 
Short-Term Cash Incentive Compensation
Each NEO participated in the AICP with respect to the 20202021 calendar year and received a short-term cash incentive award pursuant to the AICP.year. The AICP amounts paid to each NEO with respect to 2020 that are allocable to us by Enviva Management Company pursuant to the MSAs2021 are disclosed in the Summary Compensation Table under the “Non-Equity Incentive Compensation” column.
Each year the Compensation Committee and Enviva Management Company havehad discussions regarding the design and the potential values of the AICP awards. However, Enviva Management Company iswas the sponsor of the AICP and makesmade all final decisions regarding the performance metrics and target compensation levels associated with each participating employee.
With respect to the 2020 AICP awards, consistentConsistent with prior years, Enviva Management Company established an aggregate company bonus pool that iswas calculated based on performance relative to a single DCF-baseddistributable cash flow-based financial target. Enviva Management Company generally setsset aggressive performance metrics at levels that arewere designed to be extremely challenging to achieve. A threshold level was set at which the bonus pool could become funded at 50%, and then a stretch target level was determined that could fund the pool at 100% for all target awards Following the determination of the overall AICP bonus pool, individual NEO awards historically were determined by Enviva Management Company based on individual performance goals linked to certain safety, operating, financial, growth, and other targets measured at both the Partnership and our sponsor. The AICP amountsgenerally determines bonuses based on the following formula: target award amount (based on a percentage of salary), multiplied by company performance factor(s), and adjusted by individual performance factors.
As a consequence of the Simplification Transaction, Enviva Inc. assumed responsibility for each NEO allocateddecisions regarding actual payments to the PartnershipNEOs pursuant to the AICP. We adopted an amendment and restatement of the original AICP, which reflected Conversion-related administrative changes similar to those made to the LTIP (discussed below). As of the Conversion date, the name of the AICP is now the “Enviva Inc. Annual Incentive Compensation Plan.”
Following the close of the 2021 calendar year, we made the following decisions regarding the payments due to the NEOs pursuant to the AICP for 2021:
We approved and certified the achievement of the company performance portion of the AICP, which were based on the distributable cash flow performance goals that Enviva Management Company initially set for the 2021 year. The original distributable cash flow goals were determinable for the 2021 year based on actual performance during the Pre-Simplification Period. With respect to the Post-Simplification Period, the original distributable cash flow metric was not determinable based
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on actual performance, therefore we determined distributable cash flow performance by forecasting expected performance for the remaining portion of the year. The bonus pool for all participants was funded based on the company’s performance relative to the distributable cash flow performance metric for the year.
We also reviewed the 2021 individual performance goals previously set for the NEO group by Enviva Management Company, as well as taking into consideration each NEO’s impact on our successful and transformative year as well as their respective abilities to manage the challenges and uncertainty created by the COVID-19 pandemic, their impact on our operations and construction activities, as well as their role in our entry into new geographic markets and new customer segments. The actual payments made to each applicable NEO pursuant to the AICP for the 2021 year are disclosed below:
NameAllocable Amount of the Actual 2020 AICP Award
John K. Keppler$343,297 
Shai S. Even170,465 
Thomas Meth109,381 
William H. Schmidt, Jr.107,330 
E. Royal Smith282,403 
reflected in the Summary Compensation Table below within the “Non-Equity Incentive Compensation Awards” column.
Apart from the AICP administered by Enviva Management Company, the Partnership’s board of directors hasawards, we have the ability to award, in exceptional circumstances, discretionary bonuses. In 2020,bonuses structured to address unforeseen events or transactions that were not part of the Partnership awarded certain NEOs transaction-related cash bonusesAICP performance goals at the beginning of the year. The original AICP award design for 2021 did not identify or include the goal of completing the Simplification Transaction and the Conversion. Therefore, due to the unique impact of the Simplification Transaction and the Conversion on our business in 2021, we determined to provide a one-time transaction bonus to Messrs. Keppler, Even and Schmidt in recognition offor their efforts for us in 2020, includingto successfully complete these two transactions and the equity financing activities conducted in June of 2020. The transaction bonuses are subjectadditional responsibilities that each officer had placed upon them with respect to a claw-back provision requiring repayment net of taxesthese transactions in the event2021 year. The Simplification Transaction and the Conversion required significant efforts from these three named executive officers during the 2021 year, and the Compensation Committee ultimately determined that the time commitment these transactions required merited special consideration outside of the terminationgoals that had originally been part of the NEO’s employmentAICP awards. This transaction award with respect to Messrs. Even and Schmidt were lieu of any award that they might otherwise have earned pursuant to the AICP for cause, or in the event that the NEO resigns without good reason, in each case within the three year period following the grant of the bonus.2021 year. The transaction bonus amounts are disclosed as “Bonuses” in the Summary Compensation Table.
Target bonus percentages (as compared to base salary amounts) were set in the most recent employment agreements at the following levels, although the agreements did set a specific value for 2021 target bonus amounts, also noted below:
NameTarget Bonus (As a Percentage of Base Salary)2021 Target Bonus Amount ($)2021 Actual AICP Amount ($)2021 Transaction Bonus Amount ($)
John K. Keppler150 %$1,200,000 $780,000 $1,200,000 
Shai S. Even125 %556,800 N/A556,800 
Thomas Meth125 %467,500 514,250 N/A
William H. Schmidt, Jr.125 %534,000 N/A534,000 
E. Royal Smith125 %407,000 305,250 N/A
Long-Term Equity Incentive Compensation
Unlike with base salary and AICP awards, we, rather than Enviva Management Company, have always maintained decision-making authority over the LTIP. Following the Simplification Transaction, we amended and restated the LTIP to make certain changes necessitated by the Conversion (described in more detail below), but we retained sponsorship and administrative authority over all LTIP awards. The Simplification Transaction and Conversion-related changes to outstanding LTIP awards made in the Post-Simplification Period are described in more detail below.
The LTIP is intended to promote our long-term success and increase long-term unitholdershareholder value by attracting, motivating, and aligning the interests of our independent directors, officers, and other employees with those of our unitholders.shareholders. Our LTIP provides for the grant of a variety of awards, but the award that we havehistorically determined towould most appropriately incentivize and reward our LTIP participants, including the NEOs, is awas the phantom unit award. See Note 18, Equity-Based Awards. Each NEO received a long-term equity incentive award with respect to the 20202021 calendar year under the LTIP in the form of phantom units. The terms of our NEOs’ LTIP awards arewere determined by our Boardboard of directors following a recommendation from the Compensation Committee.In 2020, in an effort to further enhance retention and more closely align the LTIP with longer-term unitholdershareholder interest, we transitioned the vesting schedule for new equity awards made to our NEOs under the LTIP from a 3-year cliff vesting schedule to a 4-year cliff vesting schedule.schedule (and certain outstanding awards in the tables below may reflect the historical 3-year schedules). Beginning in 2021, our NEOs received LTIP awards that were solely on the 4-year vesting schedule.
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The 20202021 phantom unit grants to our NEOs were divided into 50% time-based phantom units and 50% performance-based phantom units:
Time-based phantom units vest at the end of a three- or four-year period based on continued service following the grant date.
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Performance-based phantom units vest upon the achievement of specified levels of DCFdistributable cash flow per common unit and a TUR percentile over a multi-year period. The performance-based phantom unit awards may vest between 0% and 200% of the target amount granted to each NEO. The Committee may also exercise its discretion with respect to other factors, such as our performance with respect to environmental, social, and governance matters, during the relevant performance period.
Each grant of phantom units includesincluded the right to receive distribution equivalent rights (“DERs”).The DERs associated with performance-based phantom units are paid to the holder in cash within 60 days following the vesting of the associated award (if any) and are forfeited if the underlying award was forfeited for any reason.The DERs associated with the time-based phantom units are paid to the holder of the award within the 60-day period immediately following any cash distribution that we makemade with respect to our common units.The settlement of the phantom Phantom units maycould be madesettled in cash or in common units, at the discretion of our Compensation Committee.
The target value of LTIP awards that each NEO receives annually is set forth in his employment agreement as a percentage of base salary.Although each NEO’s employment agreement iswas with Enviva Management Company at the beginning of the Pre-Simplification Period, our Board (following recommendations from the Compensation Committee) hashad decision-making authority over the terms and conditions, of any LTIP award, such as vesting and forfeiture provisions.provisions, of any LTIP award granted in 2021. In determining the LTIP awards granted to the NEOs on January 29, 2020,27, 2021, our Compensation Committee and the full Board considered theour performance of the Partnership as well as individual performance for 2020. The grant date fair value of the phantom units awarded in January 20202021 is disclosed in the Summary Compensation Table under the Stock Awards column, based on the percentage of the award allocated to us.us at that time.
The number of phantom units granted to the NEOs in January 20202021 is set forth below:
NameNumber of Time-based Phantom Units Granted in 2020*Target Number of Performance-based Phantom Units Granted in 2020*
John K. Keppler85,87885,878
Shai S. Even29,61429,614
Thomas Meth20,27020,270
William H. Schmidt, Jr.27,96827,968
E. Royal Smith18,69018,690
*The time-based phantom units and performance-based phantom units were each further divided evenly between a three-year and a four-year cliff vesting schedule. The potential number of phantom units that could become vested pursuant to the satisfaction of the required performance metrics is set forth below.
Beginning with the 2020 compensation year, the Compensation Committee transitioned the vesting schedule under the LTIP applicable to the NEOs and certain other executives of Enviva Management Company to a 4-year cliff vesting schedule. For 2020, two tranches of LTIP awards were issued: (a) one tranche of time- and performance-based phantom units with a three-year cliff vesting schedule and (b) one tranche of time- and performance-based phantom units with a four-year cliff vesting schedule. The combination of awards was implemented for this single year to ensure that the program could be effectively transitioned from a three-year cliff vesting schedule to a four-year cliff vesting schedule without having any periods in which our NEOs would not have equity compensation that directly aligns them with our unitholders.
NameNumber of Time-based Phantom Units Granted in 2021Target Number of Performance-based Phantom Units Granted in 2021
John K. Keppler35,16835,168
Shai S. Even11,99811,998
Thomas Meth8,7928,792
William H. Schmidt, Jr.11,50711,507
E. Royal Smith7,6547,654
For each performance-based phantom unit award granted on January 29, 2020,27, 2021, vesting iswas originally contingent upon the achievement of certain levels of per-unit DCFdistributable cash flow growth and our percentile ranking of TSR for our peer group over the respective three- or four-year periods. Actual levelsThe number of per-unit DCF growthshares of common stock that will resultvest under each award would have been calculated by multiplying the target number of performance-based awards by the product of (i) the applicable distributable cash flow factor for the award and (ii) the applicable TSR factor for the award. However, the Simplification Transaction and the Conversion resulted in between 0%certain changes to the performance goals applicable to the performance awards granted in 2021, as described below.
We amended and 200%restated the LTIP in connection with the Conversion in order to reflect our new corporate structure. For example, references to “common units” were amended to “common stock,” references to “distributions” were amended to “dividends,” phantom unit awards were replaced with restricted stock unit awards, and the administration of the performance units vesting. The achievementLTIP was modified from our former GP to Enviva Inc. Given that we did not authorize any additional shares of common stock, as a result of the 200% “maximum” performance level would require exceptional performance, whereas achievement below the threshold performance level would result in 0% vesting. The table below shows the numberone-to-one conversion of common units to common stock that could be paid out uponoccurred in connection with the achievementConversion, 3,450,000 shares of threshold, target or maximumour common stock remain available for delivery pursuant to the amended and restated LTIP. All outstanding awards under the LTIP as of the Conversion date were subject to the administrative changes made in the amended and restated LTIP. The name of the LTIP is now the Enviva Inc. Long-Term Incentive Plan.
The Simplification Transaction and the Conversion did not result in substantive changes to the phantom unit awards made in the 2019 calendar year (including to our NEOs). With respect to the performance-based phantom units granted in the 2020 and 2021 calendar years (including to the NEOs), the performance levels for eachcriteria were modified to reflect the aggregate impact of the Simplification Transaction and Conversion, but with the intention of keeping the potential realizable value of the awards comparable before and after adjustment; consequently, all distributable cash flow-related performance metrics were eliminated, such that the sole performance criterion applicable to such performance-based phantom unit granted under the LITP in 2020.awards (now restricted
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stock unit awards) is Enviva’s percentile ranking relative to the companies in the S&P 500 index on the basis of total shareholder return for the applicable performance period (“TSR Factor”), as shown in the table below:
Below ThresholdThresholdTargetMaximum
TSR Factor
< 30th percentile
30th percentile
60th percentile
≥ 90th percentile
Percentage of target earned (“Payout Multiplier”)
0%50%100%200%
*    If the TSR Factor is between the Threshold and Maximum percentiles, then the Payout Multiplier will be determined by linear interpolation between the Threshold and Target Payout Multipliers or Target and Maximum Payout Multipliers, as applicable.

3-YEAR PERFORMANCE-BASED PHANTOM UNITS4-YEAR PERFORMANCE-BASED PHANTOM UNITS
ThresholdTargetMaximumThresholdTargetMaximum
John K. Keppler21,47042,93985,87821,47042,93985,878
Shai S. Even7,40414,80729,6147,40414,80729,614
Thomas Meth5,06810,13520,2705,06810,13520,270
William H. Schmidt, Jr.6,99213,98427,9686,99213,98427,968
E. Royal Smith4,6739,34518,6904,6739,34518,690
2021 LTIP Awards
InNo changes were made to the performance period applicable to the 2020 and 2021 performance-based phantom units grantedunits.In addition to the NEOs underTSR Factor described above, the awards will continue to be subject to all time-based vesting conditions (and forfeiture upon the termination events set forth in the 2020 and 2021 award agreements) for the remainder of the original performance periods.
Beginning with the 2022 year, the most recent employment agreements also set forth a target LTIP will vest solely following a four-year period. Moreover, the Compensation Committee, upon discussion with and review of information provided by the Compensation Consultant, added relative TSRaward value, set as a new performance metricpercentage of the applicable executive’s base salary as in addition to DCF-based metrics over such four-year period. The Committee may also exercise its discretion witheffect on the first day of the calendar year in which the grant occurs, as follows for each NEO (other than Mr. Keppler).With respect to other factors, such asMr. Keppler, his employment agreement states that his LTIP target value will equal a multiple of his base salary in effect on the Partnership’s performance with respect to environmental, social and governance matters, duringfirst day of the relevant performance period.calendar year in which a grant occurs that equals $3,400,000, which would be 340% of his current base salary of $1,000,000, but will change in the event that his base salary is modified.
NameTarget LTIP Value (As a Percentage of Base Salary)
John K. Keppler340 %
Shai S. Even250 %
Thomas Meth250 %
William H. Schmidt, Jr.250 %
E. Royal Smith200 %
Other BenefitsElements of 2021 Compensation
Retirement and Health and Welfare — Enviva Management Company offersPlans
We generally offered the same types of retirement, health, and welfare benefits to the NEOs as part of itsour total executive compensation package as it doeswe did to other eligible employees.employees, although our NEOs also received the following: a supplemental individual term life insurance policy and a comprehensive annual physical with customized wellness coaching. The Simplification Transaction and the Conversion did not have a material impact on these plans, and our NEOs participated in these plans on the same terms in the Pre-Simplification Period and the Post-Simplification Period.
Our NEOs currently participate in a 401(k) plan maintained by Enviva Management Company. The 401(k) plan permits all eligible employees, including our NEOs, to make voluntary pre-tax contributions and/or Roth after-tax contributions to the plan. In addition, Enviva Management Company is permitted to make discretionary matching contributions under the plan. All matching contributions made during the first three years of an individual’s employment vest under the plan following the satisfaction of an initial three-year cliff vesting schedule; thereafter, all matching contributions vest immediately. All contributions under the plan are subject to certain annual dollar limitations, which are periodically adjusted as required by law.
Employment Agreements — As noted above, Enviva Management Company has entered into employment agreements with each of the NEOs, with the most recent amendmenthealth and restatement of each agreement occurring in November 2020.Mr. Even’s employment agreement has a three-year initial term beginning in June 2018,welfare plans, the Simplification and the remaining NEOs’ employment agreements contain one-year terms beginningConversion didn’t have a material impact on the November 2020 amendment date. Each employment agreement providesthese plans, and NEO participation was not modified for automatic renewal for successive 12-month periods following the end of such agreement’s term unless either party provides written notice of non-renewal at least 60 days prior to a renewal date. Under the employment agreements, the NEOs are each entitled to an annualized base salary and are eligible for annual AICP awards and LTIP awards, which have been detailed above. As described below under “—Potential Payments Upon Termination or a Changethose transactions in Control,” the employment agreements also provide for certain severance payments in the event an NEO’s employment is terminated under certain involuntary circumstances, such as a termination without cause, by an NEO for good reason, or upon the death or disability of an NEO. A portion of payments made as a result of a termination of employment, such as in the event of the acceleration of a NEOs units granted pursuant to the LTIP, may be allocable to us pursuant to the MSAs.2021.
UnitSecurity Ownership Requirements
The Partnership maintains a UnitWe maintain the “Common Stock Ownership and Retention PolicyGuidelines (the “Retention Policy”). The Retention Policy provides that is administered by the Compensation Committee and requires the officers of the General Partner who are required to file ownership reports under Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”) and certain other officers, as designated from time-to-time by our General Partner’s Boardboard of directors or the Compensation Committee, to retain at least 50% (and where the individual has not met certain holding requirements by specific timelines, 100%) of common unitsequity awarded under the LTIP (net of any common unitsequity withheld or sold to cover tax liabilities)liabilities upon vesting) until certain ownership requirements are met.The requirements for our NEOs are set forth in the table below:
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NameMultiple of Annualized Base Salary
CEO5x
Other NEO’s3x
UnitsStock that countcounts towards the satisfaction of the officer retention requirementrequirements of the Retention Policy include common unitsstock held directly by each NEO, common unitsstock owned indirectly by such NEO (e.g., by a spouse or other immediate family member residing in the same
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household or a trust for the benefit of such NEO or his or her family), and phantom unitstime-based restricted stock granted under the LTIP (excluding phantom units subjectLTIP.
We amended the Retention Policy following the Simplification Transaction and Conversion to performance-based vesting conditions).address the resulting structural changes within our organization and renamed it “Common Stock Ownership and Retention Guidelines” but did not change the substantive ownership requirements. As of the date of this filing, each of our NEOs was in compliance with the Retention Policy.policy.
Incentive Compensation Recoupment Policy
The LTIP providesand the AICP provide that any award granted pursuant to the applicable plan will be subject to any claw-back or recoupment policies required by law, securities exchange rules, or otherwise, as determined to be appropriate by our General Partner.Inboard of directors.
Amendments to Employment Agreements
Each of the event thatNEOs was party to an employment agreement with Enviva Management Company determinesduring the 2021 year. Consistent with the philosophy in the Pre-Simplification Period regarding employment agreements, our Board determined that we should continue to grant transaction-relatedmaintain employment agreements with our NEOs in order to ensure that they will perform their roles for an extended period of time. Certain provisions contained within these employment agreements, such as potential severance benefits (including change in control benefits for certain individuals) and restrictive covenants, are also essential to retaining our talented management team and protecting the interests of our stockholders.
At the time of the Simplification Transaction, the employment agreements for Messrs. Keppler and Even were amended and restated, modifying the definition of a “Change in Control” to align with the new organizational structure resulting from the Simplification Transaction (defined and described in more detail below within the section titled “Potential Payments upon Termination and Change in Control”). In December 2021, each of the remaining NEOs’ employment agreements were amended and restated, with the agreements for Messrs. Keppler and Even being amended and restated a second time, to reflect all Conversion-related items that were not reflected within their Simplification Transaction-related amendments. The December amendments clarified that, following the Conversion, references to the “Partnership” or special bonusesthe “General Partner” would be replaced with “Enviva Inc.,” and references to the “General Partner’s board of directors” would be replaced with references to our “Board.” The December amendments to the employment agreements also set the level of compensation that would be applicable to the NEOs those awardsfor the relevant portion of the Post-Simplification Period (including a clarification of the target bonus amounts for 2021) as well as certain 2022 compensation levels.
The most recent employment agreements reset the terms of each employment agreement. The new agreements will generally have a one year term that will end on December 1, 2022. That term may be extended and renewed for additional one-year periods if neither party has delivered a written notice of non-renewal within the sixty (60) day period prior to the expiration of the term.
The most recent employment agreements also set new base salaries, target bonus percentages under the AICIP, and target LTIP award values for the NEOs, each as described above.
As noted above, the employment agreements contain potential severance and, with respect to certain NEOs, change in control benefits, as well as certain restrictive covenants. Those potential benefits are generally granted with a built-in claw-back provision.
Anti-Hedgingdescribed in more detail and Anti-Pledging Policy
All of our employees, including our NEOs,quantified within the section titled “Potential Payments upon Termination and our directors are subject to our Insider Trading Policy, which, among other things, prohibits any covered individual from entering into short sales or hedging or pledging shares of our common units.The anti-hedging policy containedChange in our Insider Trading Policy specifically prohibits employees, including our NEOs, directors and their designees from purchasing financial instruments or otherwise engaging in transactions that hedge or offset or are designed to hedge or offset any decrease in the market value of our securities (or derivatives thereof), regardless of how the securities (or derivatives thereof) were acquired.Control.”
Compensation Risk Assessment
In accordance with the requirements of Item 402(s) of Regulation S-K, to the extent that risks may arise from our compensation policies and practices for our employees that are reasonably likely to have a material adverse effect on us, we are required to discuss our policies and practices for compensating our employees (including our employees that are not NEOs) as they relate to our risk management practices and risk-taking incentives. We have determined that our compensation policies and practices for our employees, including our NEOs, do not encourage excessive risk-taking and are not reasonably likely to have a material adverse effect on us. Our Compensation Committee routinely assesses our compensation policies and practices and takes this consideration into account as part of its review.
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Report of the Compensation Committee
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on the reviews and discussions referred to in the foregoing sentence, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Annual Report.
John C. Bumgarner, Jr.
Ralph AlexanderPierre F. Lapeyre, Jr.,
Jeffrey W. Ubben
NOTE REGARDING EXECUTIVE AND DIRECTOR COMPENSATION TABLES
As further described in the CD&A, all outstanding time-based and performance-based phantom units were converted to restricted stock units upon the Conversion, and all outstanding equity awards held by our NEOs and our directors as of the date of this filing are in the form of restricted stock units. However, at the time of the grant, and throughout the 2021 year, the awards described in the table below were in the form of phantom units, therefore the tables below will generally describe phantom unit awards.
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SUMMARY COMPENSATION TABLE
The table below sets forth the annual compensation allocated to us for our NEOs for the fiscal years ended December 31, 2020,2021, December 31, 20192020, and December 31, 2018,2019, to the extent the individual was a “named executive officer” for that year.
The compensation disclosed below with respect to the NEOs reflects only2019 and 2020 calendar years is the portion of compensation expense that is allocated to usfor which we were responsible for partially reimbursing Enviva Management Company pursuant to the MSAs.MSAs, therefore it only reflects a portion of the compensation that the NEOs received for those years. The disclosurescompensation disclosed below relatingwith respect to the 2021 calendar year is the compensation and benefitsfor the full amount paid directly byto each NEO, irrespective of any allocation between Enviva Inc. and Enviva Management Company, are based on information provided to us by Enviva Management Company.as discussed above.
Name and Principal PositionName and Principal PositionYearSalaryBonus (1)Unit
Awards (2)
Non-Equity Incentive Plan Compensation (1)All Other Compensation (3)TotalName and Principal PositionYearSalaryBonus (1)Unit Awards (2)Non-Equity Incentive Plan Compensation (1)All Other Compensation (3)Total
John K. KepplerJohn K. Keppler2020$182,838 $600,000 $1,631,253 $343,297 $2,138 $2,759,526 John K. Keppler2021$816,986 $1,200,000 $3,400,044 $780,000 $8,700 $6,205,730 
(Chairman of the Board of Directors, President and Chief Executive Officer)(Chairman of the Board of Directors, President and Chief Executive Officer)2019170,885 — 642,712 271,875 2,100 1,087,572 (Chairman of the Board of Directors, President and Chief Executive Officer)2020182,838 600,000 1,631,253 343,297 2,138 2,759,526 
2018190,248 — 784,014 204,300 2,355 1,180,917 2019170,885 — 642,712 271,875 2,100 1,087,572 
Shai S. EvenShai S. Even2020112,796 350,000 562,518 170,465 2,138 1,197,917 Shai S. Even2021466,208 556,800 1,159,968 — 8,700 2,191,676 
(Executive Vice President and Chief Financial Officer)(Executive Vice President and Chief Financial Officer)2019109,614 — 273,594 121,500 2,100 506,808 (Executive Vice President and Chief Financial Officer)2020112,796 350,000 562,518 170,465 2,138 1,197,917 
201898,780 — 467,487 105,060 835 672,162 2019109,614 — 273,594 121,500 2,100 506,808 
Thomas MethThomas Meth202097,097 75,000 385,029 109,381 2,138 668,645 Thomas Meth2021431,370 — 850,012 514,250 8,700 1,804,332 
(Executive Vice President, Sales & Marketing)
(Executive Vice President and Chief Commercial Officer)(Executive Vice President and Chief Commercial Officer)202097,097 75,000 385,029 109,381 2,138 668,645 
William H. Schmidt, Jr.William H. Schmidt, Jr.202085,339 350,000 425,002 107,330 1,710 969,381 William H. Schmidt, Jr.2021447,548 534,000 1,112,498 — 8,700 2,102,746 
(Executive Vice President, Corporate Development and General Counsel)(Executive Vice President, Corporate Development and General Counsel)(Executive Vice President, Corporate Development and General Counsel)202085,339 350,000 425,002 107,330 1,710 969,381 
E. Royal SmithE. Royal Smith2020249,389 — 994,046 282,403 5,985 1,531,823 E. Royal Smith2021371,885 — 739,990 305,250 8,700 1,425,825 
(Executive Vice President, Operations)(Executive Vice President, Operations)2019238,606 — 522,318 167,738 5,880 934,542 (Executive Vice President, Operations)2020249,389 — 994,046 282,403 5,985 1,531,823 
2018178,480 — 728,566 160,650 4,496 1,072,192 2019238,606 — 522,318 167,738 5,880 934,542 
(1)Amounts in the Non-Equity Incentive Plan Compensation column with respect to 2018 and 2019 represent the annual discretionary cash bonuses for each NEO under the AICP, which was operated in a manner to provide performance-based incentive awards in those years,that year, although the amounts were inadvertently reported in prior years within the “Bonus” column and have now been moved. As further described in the CD&A, thecorrected. The AICP awards for the 2020 yearand 2021 years were also deemed to operate as performance-based incentive awards and are reported within the Non-Equity Incentive Plan Compensation column. Amounts in the “Bonus” column with respect to the 2020 yearand 2021 years relate to the transaction-based bonuses received by certain NEOs for the 2020 year.
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Tableyear, and the bonuses provided to Messrs. Keppler, Even and Schmidt relating to the Simplification Transaction and the Conversion in 2021, as applicable. The division of Contentsawards between the AICP and transaction-related bonuses for the 2021 year are described in more detail above within the CD&A.

(2)The amounts reflected in this column represent the aggregate grant date fair value of time-based and performance-based phantom units (which include tandem DERs) granted to the NEOs pursuant to the LTIP, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 718, disregarding the estimate of forfeitures. The grant date fair value for time-based phantom unit awards issued in 20202021 is based on the closing price of our common units on the date of grant, which was $37.99$48.34 per unit for awards granted on January 29, 2020.27, 2021. The grant date fair value of performance-based phantom unit awards is reported based on the probable outcome of the performance conditions on the grant date.date of grant. See Note 18, Equity-Based Awards, to our consolidated financial statements for additional detail regarding assumptions underlying the value of these awards. If the maximum amount, rather than the probable amount, allocated to us were reported in the table with respect to the performance-based phantom units, the
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values associated with the 4-year performance-based grants would be as follows: Mr. Keppler, $1,631,253;$3,400,043; Mr. Even, $562,518,$1,159,967, Mr. Meth, $385,029,$850,011, Mr. Schmidt, $425,002$1,112,497, and Mr. Smith, $994,046.$739,989.
(3)Amounts reported in the “All Other Compensation” column reflect employer contributions to the NEOs’ accounts under the 401(k) plan in which the NEOs participate.
20202021 GRANTS OF PLAN-BASED AWARDS
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1)Estimated Possible Payouts Under Equity Incentive Plan Awards (2)Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1)Estimated Possible Payouts Under Equity Incentive Plan Awards (2)
NameNameGrant DateThresholdTargetMaximumThreshold (Units)Target (Units)Maximum (Units)All Other Equity Awards (3)(Units)Grant Date Fair Value (4)NameGrant DateThreshold ($)Target ($)Maximum ($)Threshold (#)Target (#)Maximum (#)All Other Equity Awards (#)(3)Grant Date Fair Value ($)(4)
John K. KepplerJohn K. Keppler$135,938 $271,875 $543,750 John K. Keppler$600,000 $1,200,000 $— 
1/29/202042,93985,878171,756$815,626 1/27/202117,58435,16870,336$1,700,022 
1/29/202085,878815,626 1/27/202135,1681,700,022 
Shai S. EvenShai S. Even67,500 135,000 270,000 Shai S. Even278,400 556,800 — 
1/29/202014,80729,61459,228281,259 1/27/20215,99911,99823,996579,984 
1/29/202029,614281,259 1/27/202111,998579,984 
Thomas MethThomas Meth43,313 86,625 173,250 Thomas Meth173,250 346,500 — 
1/29/202010,13520,27040,540192,514 1/27/20214,3968,79217,584425,006 
1/29/202020,270192,514 1/27/20218,792425,006 
William H. Schmidt, Jr.William H. Schmidt, Jr.42,500 85,000 170,000 William H. Schmidt, Jr.267,000 534,000 — 
1/29/202013,98427,96855,936212,501 1/27/20215,75411,50723,014556,249 
1/29/202027,968212,501 1/27/202111,507556,249 
E. Royal SmithE. Royal Smith111,825 223,650 447,300 E. Royal Smith203,500 407,000 — 
1/29/20209,34518,69037,380497,023 1/27/20213,8277,65415,308369,995 
1/29/202018,690497,023 1/27/20217,654369,995 
(1)The values within these columns reflect the threshold target and maximumtarget values of the AICP awards that could be allocable to us for the 2020 year.2021 calendar year, as of the date of their grant. At the beginning of the year, Messrs. Even and Schmidt were included within the aggregate company bonus pool; however, as described further above within the CD&A, their bonus awards for the 2021 were deemed to be payable outside of the AICP.
(2)These columns reflect the performance-based phantom units granted to our NEOs during the 20202021 calendar year. The portion of the award settlement that will be allocated to us will be governed by the MSAs.
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(3)This column reflects the time-based phantom units granted to our NEOs during the 20202021 calendar year.
(4)As further described in Footnote (2) to the Summary Compensation Table, the values in the “Grant Date Fair Value” column are determined by multiplying (a) the number of phantom units granted (with the probable grant date value for performance-based phantom units to be at target levels) by (b) $37.99,$48,34, the closing price of our common units on the grant date by (c) the percentage allocated to us pursuant to the MSAs.of grant.
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NARRATIVE DISCLOSURE TO THE SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE
Management Services Agreements
The amounts set forth in the table above for the 2019 and 2020 years reflect only the portion of compensation that iswas allocable to us pursuant to the MSAs. Following the Simplification Transaction, we were responsible for the full amount of compensation paid to our NEOs. In order to provide a fulsome picture of NEO compensation in 2021, we are presenting the full amount of compensation paid to our NEOs in 2021 notwithstanding the partial allocation of that amount during the Pre-Simplification Period to Enviva Management Company. For a more detailed description of the MSAs and our relationship with Enviva Management Company, see “Item 13. “Certain Relationships and Related Transactions, and Director Independence—Other Transactions with Related Persons--Management Services Agreements” in this Annual Report.
Phantom Unit Awards and Restricted Stock Unit Awards
We granted time-based and performance-based phantom unit awards to our NEOs pursuant to the LTIP in 2020. Half of2021. In connection with the time-basedConversion, all phantom unit awards will cliff vest following a three-year period, and half will cliff vest following a four-year period, in each casewere converted to restricted stock unit awards, subject to the NEOs continued employment.Halfsame terms and conditions immediately prior to the Conversion except that for performance-based phantom unit awards granted in the 2020 and 2021 calendar years, the performance criteria were modified to reflect the aggregate impact of the Simplification Transaction and Conversion; consequently, all DCF-related performance metrics were eliminated, such that the sole performance criterion applicable to such performance-based phantom unit awards is the TSR Factor. The expected value of the performance-based phantom units will cliff vest following a three-year performance period, and half will cliff vest following a four-year period, subject to the achievement of specified levels of DCF per common unit over the applicable performance period. The performance-based phantom unit awards may vest between 0%was similar immediately before and 200% ofafter the target amount granted to each NEO.modification. The terms and conditions, including vesting, are further described above in the CD&A under “—2021 NEO Compensation.” The potential acceleration and forfeiture events relating to thesethe phantom unitsunit awards (as of December 31, 2021) are described in greater detail under “—Potential Payments Upon Termination or a Change in Control” below.
OUTSTANDING EQUITY AWARDS AT 20202021 FISCAL YEAR‑END
The following table reflects information regarding outstanding equity‑based awards held by our Named Executive OfficersNEOs as of December 31, 2020:2021.As noted above, the awards are discussed as phantom unit awards, although as of the date of this filing they have been converted to restricted stock unit awards as a result of the Conversion.
Unit AwardsUnit Awards
NameNameNumber of Units That Have Not Vested (1)Market Value of Units That Have Not Vested (2)Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (3)Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested (2)NameNumber of Units That Have Not Vested (1)Market Value of Units That Have Not Vested (2)Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (3)(4)Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested (2)
John K. KepplerJohn K. KepplerJohn K. Keppler
Phantom Units234,438 $10,648,174 122,570 $5,567,129 
237,842 $16,748,842 121,046 $8,524,059 
Shai S. EvenShai S. EvenShai S. Even
Phantom Units86,331 $3,921,154 47,757 $2,169,123 
93,501 $6,584,339 41,612 $2,930,317 
Thomas MethThomas MethThomas Meth
Phantom Units82,805 $3,761,003 32,704 $1,485,416 
70,084 $4,935,332 29,062 $2,046,546 
William H. Schmidt, Jr.William H. Schmidt, Jr.William H. Schmidt, Jr.
Phantom Units101,509 $4,610,539 43,337 $1,968,367 
89,487 $6,301,698 39,475 $2,779,830 
E. Royal SmithE. Royal SmithE. Royal Smith
Phantom Units74,615 $3,389,013 29,964 $1,360,965 
60,782 $4,280,243 26,344 $1,855,144 
(1)The amounts in this column reflect outstanding time-based phantom unit awards, which vest as set forth in the table that follows,within footnote 4 below, so long as the applicable NEO remains continuously employed by Enviva Management Companyus or one of our affiliates from the grant date through each vesting date. This table also reflects the number of units that were initially granted as performance-based awards, but for which the performance period ended on December 31, 2020, at which time they became time-based phantom units until the date the Compensation Committee certified performance and
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settled the awards in the 2021 year. See the section below titled “—Potential Payments Upon Termination or Change in Control” for a description of potential acceleration and forfeiture provisions.
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(2)The amounts reflected in this column represent the market value of the common units underlying the phantom unit awards granted to the Named Executive Officers andNEOs as set forth in the preceding column, computed based on the closing price of our common units on December 31, 2020,2021, which was $45.42$70.42 per unit. The portion of the award settlement that will be allocated to us will be governed by the MSAs.
(3)The amounts in this column reflect the actual number of common units issued in the 2022 year upon settlement of outstanding performance-based phantom unit awards granted in 2019, even though such awards could have been earned up to 200% of target at maximum performance, and the target number of common units issuable upon settlement of outstanding performance-based phantom unit awards granted in 20192020 and 2020,2021, which vest on the dates set forth above based on achievement of performance metrics with respect to the three-year period ending on December 31, 2021 and 2022, and the four-year period ending on December 31, 2023 and 2024, respectively, so long as the applicable Named Executive OfficerNEO remains continuously employed by Enviva Management Companyus or one of our affiliates from the grant date through the end of each performance period.period and until we have certified the applicable performance level for that award. With respect to the 2019 performance-based phantom units, if the number of awards and the value of awards had hit maximum performance payout at 200% of target rather than the actual 186% represented in the table,those numbers would be as follows: Mr. Kepler, 242,979 awards at a value of $17,110,581; Mr. Even, 96,041 awards at a value of $6,763,207; Mr. Meth, 71,825 awards at a value of $5,057,917; Mr. Schmidt, 96,639 awards at a value of $6,453,218; and Mr. Smith, 62,360 at a value of $4,391,391 . See the section below titled “—Potential Payments Upon Termination or Change in Control” for a description of potential acceleration and forfeiture provisions.
(4)The following sub-table reflects the regularly scheduled vesting date for each award that is disclosed as outstanding within the main table above:
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Name Vesting Date or Last Date of Performance PeriodNumber of Time-based Phantom Units to VestNumber of Performance-based Phantom Units to Vest
John K. KepplerJanuary 27, 202153,142
JanuaryDecember 31, 202130,367
June 4, 202173,38416,502
January 30, 202248,549
December 31, 202242,939
January 29, 202342,939
December 31, 202342,939
January 29, 202442,939
December 31, 202435,168
January 27, 202535,168
Shai S. EvenJanuary 27,December 31, 202124,547
June 4, 202136,28614,027
January 30, 202218,143
December 31, 202214,807
January 29, 202314,807
December 31, 202314,807
January 29, 202414,807
December 31, 202411,998
January 27, 202511,998
Thomas MethJanuary 27, 202117,906
JanuaryDecember 31, 202110,232
June 4, 202124,86816,502
January 30, 202217,895
December 31, 202210,135
January 29, 202310,135
December 31, 202310,135
January 29, 202410,135
December 31, 20248,792
January 27, 20258,792
William H. Schmidt, Jr.January 27, 202122,663
JanuaryDecember 31, 202112,950
June 4, 202130,73816,502
January 30, 202221,426
December 31, 202213,984
January 29, 202313,984
December 31, 202313,984
January 29, 202413,984
December 31, 202411,507
January 27, 202511,507
E. Royal SmithJanuary 27, 202116,517
JanuaryDecember 31, 20219,438
June 4, 202122,54816,502
January 30, 202213,468
December 31, 20229,345
January 29, 20239,345
December 31, 20239,345
January 29, 20249,345
December 31, 20247,654
January 27, 20257,654
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UNITS VESTED IN 20202021
The following table provides information on the vesting of phantom units held by the NEOs in 2020.2021. None of the NEOs held stock options in 2020.2021. The value realized from the vesting of phantom unit awards is equal to the closing price of our common units on the vesting date or the performance certification date for performance awards, as applicable, multiplied by
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the number of shares acquired. The value is calculated before payment of any applicable withholding or other income taxes. The portion of the award settlement that will be allocated to us will be governed by the MSAs.
NameNameNumber of Units Acquired Upon VestingValue Realized Upon VestingNameNumber of Units Acquired Upon Vesting (#)Value Realized Upon Vesting ($)
John K. KepplerJohn K. Keppler42,517 $1,618,399 John K. Keppler100,011 $4,875,515 
Shai S. EvenShai S. Even— — Shai S. Even38,574 1,861,301 
Thomas MethThomas Meth18,079 688,173 Thomas Meth44,640 2,169,081 
William H. Schmidt, Jr.William H. Schmidt, Jr.22,919 872,406 William H. Schmidt, Jr.52,115 2,534,445 
E. Royal SmithE. Royal Smith14,305 544,516 E. Royal Smith42,457 2,062,380 
PENSION BENEFITS AND NON-QUALIFIED DEFERRED COMPENSATION
We have not maintained, and do not currently maintain, a defined benefit pension plan or a nonqualified deferred compensation plan providing for retirement benefits. Our NEOs currently participate in a 401(k) plan maintained by Enviva Management Company. The 401(k) plan permits all eligible employees, including the NEOs, to make voluntary pre‑tax contributions and/or Roth after‑tax contributions to the plan. In addition, Enviva Management Company is permitted to make discretionary matching contributions under the plan. All matching contributions made during the first three years of an individual’s employment vest under the plan following the satisfaction of an initial three‑year cliff vesting schedule; thereafter, all matching contributions vest immediately. All contributions under the plan are subject to certain annual dollar limitations, which are periodically adjusted as required by law.
POTENTIAL PAYMENTS UPON TERMINATION ORAND CHANGE IN CONTROL
Each of our NEOs maintainsis party to an employment agreement with Enviva Management Company.Underus that provides for severance compensation or accelerated vesting of equity awards in the event of certain terminations of employment, including in connection with a change in control. None of the employment agreements contain any tax reimbursement provisions in the event an NEO receives potential parachute payments under Section 280G of the Code. The outstanding equity awards held by each of the NEOs also contain certain severance and change in control benefits, but as of December 31, 2021, the treatment in the employment agreements and the outstanding equity awards are the same; as a result, there is not a separate description for equity award agreement provisions.
Employment Agreements
The employment agreements provide that, if the applicableNEO terminates employment for good reason or if an NEO’s employment is terminated without “cause,” by the applicable NEOcause, or for “good reason” or due to the applicable NEO’s death or “disability,”disability (each applicable term as defined withinbelow), subject to the employment agreements) then so long as the applicable NEO (or, in the event of his death, his estate) executes (and does not revoke within the time provided to do so)executing a release in a form satisfactory to Enviva Management Companyrelease within the time period specified in such NEO’s employment agreement, suchthe NEO will be entitled to receive the following:
an amount equal to a multiple (the “severance multiplier”) of (a) the NEO’s base salary in effect on the termination date, plus (b) the NEO’s target annual bonus as of the termination date. The severance multiplier is 1.5 for Mr. Keppler and 1.0 for Messrs. Even, Meth, Schmidt, and Smith. The severance multiplier is increased to 2.0 for Mr. Keppler and 1.5 for Messrs. Even and Schmidt if such termination occurs within 12 months following a change in control (as defined below) (a “Change in Control Termination”);
full vesting of all outstanding awards under the LTIP (which vesting for awards that include a performance requirement (other than continued service) will be based on (i)(a) actual performance if such termination occurs within the six-month period preceding the expiration of the performance period or (ii)(b) target performance if such termination occurs at any other time during the performance period). In addition, the NEOs would be eligible; and
reimbursement for cash severance benefits based on a predetermined severance factor multiplied by the NEOs annualized base salary and target annual bonus amount. The NEOs would also be eligible for reimbursement from Enviva Management Company for the continuationcontinued medical coverage of applicable group health plans. The reimbursement coverage is 18 months for Mr. Keppler and 12 months for Messrs. Even, Meth, Schmidt, and Smith. The reimbursement coverage is increased to 18 months for Messrs. Even and Schmidt if such termination occurs within 12 months following a change in control.
Definitions. The following definitions are used in the employment agreements as follows:
“Cause” is defined as:
a material breach of any applicable policy pertaining to health and safety;
engaging in acts of disloyalty, including fraud, embezzlement, theft, commission of a felony or proven dishonestly; or
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willful misconduct in the performance of, or willful failure to perform a material function of the NEO’s duties under the employment agreement.
“Good reason” is defined as, without the consent of the NEO:
a material diminution in the NEO’s authority, duties, title, or responsibilities;
a material diminution in the NEO’s base salary, target annual bonus, or target annual LTIP award;
the relocation of the geographic location of the NEO’s principal place of employment by more than 100 miles; or
delivery of a written notice of non-renewal of the NEO’s employment agreement.
A “disability” shall exist if the NEO is unable to perform the essential functions of his position, with reasonable accommodation (if applicable), due to an illness or physical or mental impairment or other incapacity that continues for a period in excess of 90 days, whether consecutive or not, in any period of 365 consecutive days.
Under the employment agreements for Messrs. Keppler, Even, and Schmidt, a “change in control” is defined as:
the sale or disposal by us of all or substantially all of our assets to any person other than an affiliate;
the simplification or consolidation of Enviva Inc. with or into another partnership, corporation, or other entity, other than a simplification or consolidation in which the equityholders of Enviva Inc. immediately prior to such transaction retain greater than 50% equity interest in the surviving entity; or
the acquisition by any person or group of the beneficial ownership of more than 50% of the equity of Enviva Inc. entitled to vote in the election of our board of directors.
Release Obligations and Restrictive Covenants
Payments and benefits under the employment agreements are conditioned on the execution of a general release of claims by the NEO in favor of us. The employment agreements also contain certain restrictive covenants pursuant to which our NEOs have recognized an obligation to comply with, among other things, certain confidentiality covenants as well as covenants not to compete in a defined market area with Enviva Management Company (or any of its affiliates to which they have provided services or about which they have obtained confidential information)us or solicit their employer’s or its affiliates’our employees in each case, during the term of the agreement and for a period of one year thereafter.
Our estimated calculationsQuantification of Benefits
The following table summarizes the LTIP award acceleration valuescompensation and other benefits that would be allocatedhave become payable to us pursuant toeach NEO assuming his employment terminated on December 31, 2021, given the MSAs in the event that the NEOs experienced an eligible employment termination eventNEO’s base salary as of December 31, 2020 are as follows: Mr. Keppler, $3,795,216; Mr. Even, $1,403,115; Mr. Meth, $1,224,467; Mr. Schmidt, $1,227,548that date, and, Mr. Smith, $3,099,788. The estimated payments are not necessarily indicative of the actual amounts such executive would have received in such circumstances, as such amounts could not be known with certainty until theif applicable, event occurs. Such LTIP acceleration values use the closing price of our common unitsstock on December 31, 2020,2021, which was $45.42 per unit.$70.42. The target annual bonus for the 2021 was the amount set forth in each NEO’s employment agreement in effect on December 31, 2021. In addition, the following table summarizes the compensation that would become payable to Messrs. Keppler, Even, and Schmidt assuming a qualifying termination and a change in control occurred on December 31, 2021.Each of the values below reflects our best estimate of the amounts and benefits that could be payable upon a termination scenario, but amounts cannot be known with certainty until or unless such an event were to occur.
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Benefits and PaymentsChange in Control TerminationTermination Without Cause, for Good Reason or Death or Disability
John K. Keppler
Cash Severance$4,400,000 $3,300,000 
Accelerated Equity Awards25,634,641 25,634,641 
Health Benefits— — 
Total$30,034,641 $28,934,641 
Shai S. Even
Cash Severance$1,570,200 $1,046,800 
Accelerated Equity Awards9,693,524 9,693,524 
Health Benefits32,241 24,152 
Total$11,295,965 $10,764,476 
Thomas Meth
Cash Severance$967,500 $967,500 
Accelerated Equity Awards7,104,463 7,104,463 
Health Benefits21,494 21,494 
Total$8,093,457 $8,093,457 
William H. Schmidt, Jr.
Cash Severance$1,513,500 $1,009,000 
Accelerated Equity Awards9,233,048 9,233,048 
Health Benefits36,474 24,316 
Total$10,783,022 $10,266,364 
E. Royal Smith
Cash Severance$799,200 $799,200 
Accelerated Equity Awards6,246,536 6,246,536 
Health Benefits21,494 21,494 
Total$7,067,230 $7,067,230 
DIRECTOR COMPENSATION
For the year ended December 31, 2020,2021, directors of our General Partner,former GP, other than Mr. Keppler, received compensation for their services on our General Partner’sformer GP’s board of directors and committees thereof consisting of:of the items below:
an annual retainer of $85,000,
an additional annual retainer of $20,000 for services as the chair of the audit committee,
an additional annual retainer of $17,500 for service as the chair of the compensation committee,
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an additional annual retainer of $15,000 for service as the chair of the health, safety, sustainability and environmental committee (the “HSSE committee”),
payment of $2,000 each time such director attended a board meeting,
payment of $1,750 each time such director attended an audit committee meeting, and
payment of $1,500 each time such director attended any meeting of the compensation committee or the HSSE committee.
Additionally, for the year ended December 31, 2020,2021, directors of our General Partner,former GP, other than Mr. Keppler and directors who are also officers or employees of Riverstone Holdings LLC or its affiliates (excluding the General Partner,former GP, the Partnership and
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its subsidiaries) (the “Sponsor Directors”), received an annual grant under the LTIP with a grant date fair value of approximately $115,000.
Until the earlier of (i) four years after a director other than Mr. Keppler Mr. Lansing and the Sponsor Directors (such director, an “independent director”) is appointed to the board of directors of our General Partner or (ii) the date on which such independent director first holds an amount of our common units with an aggregate value equal to at least $250,000, one-half of all annual retainers and payments for attending board or committee meetings are paid to such independent director in the form of common units pursuant to the LTIP and the remainder is paid in cash. Each of our independent directors has met the above conditions and 100% of their annual retainers and payments for attending board or committee meetings were paid in cash. Each director is reimbursed for out-of-pocket expenses incurred in connection with attending board and committee meetings and each director will be fully indemnified by us for actions associated with serving as a director to the fullest extent permitted under Delaware law.
Prior to 2019, the Sponsor Directors did not receive compensation under our director compensation program. Compensation of the Sponsor Directors and Mr. Lansing for their service on the Boardas a director is paid directly to Riverstone/Carlyle Management LP. With respect to Mr. Ubben, his cash compensation is paid directly to Inclusive Capital Partners, L.P.
As a result of the Conversion, our business and affairs became overseen by our board of directors, rather than the board of directors of our former GP, which oversaw the business and affairs of the Partnership as its general partner prior to the Conversion.
The following table provides information concerning the compensation of our directors, other than Mr. Keppler (whose compensation has been reported within the Summary Compensation Table), for the fiscal year ended December 31, 2020:2021, regardless of whether they were serving on our board as of December 31, 2021:
NameNameFees Earned
in Cash 
Unit
Awards (1)
Total NameFees Earned in CashUnit Awards (1)Total 
Ralph Alexander (3)Ralph Alexander (3)$101,000 $123,800 $224,800 
John C. Bumgarner, Jr.John C. Bumgarner, Jr.$195,650 $123,800 $319,450 John C. Bumgarner, Jr.235,850 122,661 358,511 
William K. Reilly122,500 123,800 246,300 
Martin N. DavidsonMartin N. Davidson— — — 
Jim H. Derryberry (3)Jim H. Derryberry (3)99,000 — 99,000 
Christopher B. Hunt (3)(4)Christopher B. Hunt (3)(4)25,250 — 25,250 
Fauzul Lakhani (3)Fauzul Lakhani (3)— — — 
Gerrit (“Gerrity”) L. Lansing, Jr. (3)Gerrit (“Gerrity”) L. Lansing, Jr. (3)65,125 56,342 121,467 
Pierre F. Lapeyre, Jr. (3)Pierre F. Lapeyre, Jr. (3)71,750 — 71,750 
David M. Leuschen (3)David M. Leuschen (3)69,750 — 69,750 
William K. Reilly (5)William K. Reilly (5)118,500 122,661 241,161 
Jeffrey W. Ubben (2)Jeffrey W. Ubben (2)80,250 119,428 199,678 Jeffrey W. Ubben (2)130,950 124,918 255,868 
Gary L. WhitlockGary L. Whitlock128,650 123,800 252,450 Gary L. Whitlock130,850 122,661 253,511 
Carl L. Williams (3)(6)Carl L. Williams (3)(6)24,750 — 24,750 
Janet S. WongJanet S. Wong148,650 123,800 272,450 Janet S. Wong150,850 122,661 273,511 
Ralph Alexander (3)117,000 — 117,000 
Jim H. Derryberry (3)103,000 — 103,000 
Robin J. A. Duggan (3)(4)78,750 — 78,750 
Christopher B. Hunt (3)103,000 — 103,000 
Carl L. Williams (3)(5)122,500 — 122,500 
Gerrit (“Gerrity”) L. Lansing, Jr. (3)(6)28,750 — 28,750 
Eva T. ZlotnickaEva T. Zlotnicka— — — 
____________________________________________
(1)Amounts included in this column reflect the aggregate grant date fair value of phantom units (which include tandem DERs) granted to the independent directors, computed in accordance with FASB ASC Topic 718, disregarding the estimate of forfeitures, in each case pursuant to the LTIP. See Note 18, Equity-Based Awards, for additional detail regarding assumptions underlying the value of these equity awards. The grant date fair value for thetime-based phantom unit awards except for those of Mr. Ubben,issued in 2021 is based on the closing price of our common units on the grant date of January 29, 2020,grant, which was $37.99$48.34 per unit. Such phantom unit for awards vested in fullgranted on January 27, 2021 and $49.49 for awards granted on April 29, 2021. The grant date fair value for Mr. Ubben’s phantom unit awards is based on the closing price of our common units on the grant date of August 5, 2020, which was $40.00 per unit. Such phantom unit awards will vest in full on August 5, 2022. As of December 31, 2020, each then-current independent director2021, Mr. Bumgarner, Mr. Reilly, Mr. Ubben, Mr. Whitlock, and Ms. Wong held 3,0282,379 unvested phantom units in the aggregate other
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thanand Mr. Ubben, whoLansing held 2,8752,324 unvested phantom units.units in the aggregate. Our non-management directors that are not independent do not receive LTIP awards, therefore they do not hold outstanding awards as of December 31, 2020.2021. Amounts in this column also reflect the aggregate grant date fair value of common units granted to the independent directors. The grant date fair value for common unit awards issued in 2021 is based on the closing price of our common units as of the end of the calendar quarter in respect of which the common units were granted, which was $52.41 per
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common unit for awards granted on July 28, 2021 and $54.09 per common unit for awards granted on November 3, 2021.
(2)Mr. Ubben was appointed to the Board on June 18, 2020. HisUbben’s cash compensation was paid to directly to Inclusive Capital Partners, L.P., although he received his LTIP grant directly.
(3)Compensation of the Sponsor Directors and Mr. Lansing, for a portion of the year, for their service on the Board is paid directly to Riverstone/Carlyle Management LP. Mr. Lansing became an independent director on April 27, 2021, and compensation provided following that date was paid to him directly.
(4)Mr. DugganHunt resigned from the Board on October 18, 2020.March 10, 2021.
(5)Prior to the Conversion, Mr. Reilly served as a director on the board of directors of the former GP. Mr. Reilly was not appointed as a director of the Company in connection with the Conversion.
(6)Mr. Williams resigned from the Board on February 5, 2021.
PAY RATIO
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Keppler, our Chief Executive Officer.
For 2021, our last completed fiscal year:
(6)The median of the annual total compensation of all employees of our company (other than Mr. LansingKeppler) was appointed$64,325; and
The annual total compensation of Mr. Keppler, as reported in the Summary Compensation Table included above, was $6,205,730.
Based on this information, for 2021 the ratio of the annual total compensation of Mr. Keppler to the Board on October 18, 2020.median of the annual total compensation of all employees was reasonably estimated to be 96 to 1.
To identity the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps:
We determined that, as of December 31, 2021, our employee population consisted of approximately 1,176 individuals with all of these individuals located in the United States. This population consisted of our full-time, part-time, and temporary employees.
We used a consistently applied compensation measure to identify our median employee by comparing the Total Gross Earnings as reflected in our payroll records for 2021, which included, amount of salary or wages, bonuses, compensation received from equity award vesting and distributions (DERs), value of life insurance premiums and gym memberships.
We identified our median employee by consistently applying this compensation measure to all of our employees included in our analysis. Since all of our employees, including our CEO, are located in the United States, we did not make any cost of living adjustments in identifying the median employee.
With respect to the annual total compensation of Mr. Keppler, we used the amount reported in the “Total” column of our 2021 Summary Compensation Table above.
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ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth the beneficial ownership of shares of common unitsstock of Enviva Partners, LPInc. as of February 15, 2021 held by:
beneficial owners of 5% or more of our common units;stock;
each director and NEO; and
all of our directors and executive officers as a group.
Unless otherwise noted, the address for each beneficial owner listed below is 72007272 Wisconsin Ave., Suite 1000,1800, Bethesda, MD 20814.
Name of Beneficial OwnerName of Beneficial OwnerCommon Units
Beneficially
Owned(1)
Percentage of
Common Units
Beneficially
Owned
Name of Beneficial OwnerCommon Stock Beneficially Owned(1)Percentage of Common Stock Beneficially Owned
Enviva Holdings, LP(2)(3)(4)13,586,375 33.95 %
Enviva Partners GP, LLC— — %
Inclusive Capital Partners, L.P.(5)4,834,867 12.08 %
Investment Funds Affiliated with Riverstone Holdings, LLC(2)Investment Funds Affiliated with Riverstone Holdings, LLC(2)27,797,923 41.83 %
Inclusive Capital Partners, L.P.(3)Inclusive Capital Partners, L.P.(3)5,719,241 8.61 %
Ralph AlexanderRalph Alexander— — 
John C. Bumgarner, Jr.(4)John C. Bumgarner, Jr.(4)225,204 *
Martin N. DavidsonMartin N. Davidson— — 
Jim H. DerryberryJim H. Derryberry— — 
Shai S. EvenShai S. Even352,604 *
Michael A. JohnsonMichael A. Johnson— — 
John K. KepplerJohn K. Keppler119,952 *John K. Keppler697,324 1.05 %
Roxanne B. KleinRoxanne B. Klein— — 
Yanina A. KravtsovaYanina A. Kravtsova92,419 *
Fauzul LakhaniFauzul Lakhani— — 
Gerrit (“Gerrity”) L. Lansing, Jr.Gerrit (“Gerrity”) L. Lansing, Jr.451 *
Pierre F. Lapeyre, Jr.(2)Pierre F. Lapeyre, Jr.(2)27,797,923 41.83 %
David M. Leuschen(2)David M. Leuschen(2)27,797,923 41.83 %
Thomas MethThomas Meth49,142 *Thomas Meth415,207 *
William H. Schmidt, Jr.William H. Schmidt, Jr.49,098 *William H. Schmidt, Jr.391,556 *
E. Royal SmithE. Royal Smith29,091 *E. Royal Smith260,095 *
Shai S. Even12,583 *
Ralph Alexander— — 
John C. Bumgarner, Jr.(6)188,858 *
Jim H. Derryberry— — 
Christopher B. Hunt— — 
Gerrit (“Gerrity”) L. Lansing, Jr.— *
William K. Reilly34,786 *
Jeffrey W. Ubben(5)4,834,867 12.08 %
Jeffrey W. Ubben(3)Jeffrey W. Ubben(3)5,719,241 8.61 %
Gary L. WhitlockGary L. Whitlock23,538 *Gary L. Whitlock35,917 *
Janet S. WongJanet S. Wong30,562 *Janet S. Wong32,941 *
All directors and executive officers as a group (16 persons)5,380,303 13.44 %
Eva T. ZlotnickaEva T. Zlotnicka— — 
All directors and executive officers as a group (20 persons)All directors and executive officers as a group (20 persons)36,020,882 54.21 %
____________________________________________
*    Less than 1% of common units outstanding.
(1)This column does not include phantomrestricted stock unit awards granted to our directors and officers pursuant to the LTIP.
(2)Effective July 22, 2020, R/C Wood Pellet Investment Partnership, L.P. transferred its interest in Enviva Holdings GP, LLC (“Holdings GP”) to Riverstone Enviva Holdings GP, LLC (“Riverstone Enviva Holdings”). As a result, Riverstone Enviva Holdings became the sole member of Holdings GP, which is the general partner of Enviva Holdings, LP (“Enviva Holdings”), which is the sole member of each of the Common Unit Holders (as defined below).
(3)David M. Leuschen and Pierre F. Lapeyre Jr. are the managing directors of Riverstone Management Group, L.L.C. (“Riverstone Management”), and have or share voting and investment discretion with respect to the securities beneficially owned by Riverstone Management, which is the general partner of Riverstone/Gower Mgmt Co Holdings, L.P., which is the sole member of Riverstone Holdings LLC, which is the sole member of Riverstone Echo GP, LLC, which is the general partner of Riverstone Echo Partners, L.P., which is the sole member of each of Riverstone ECF GP, LLC (“ECF GP”) and Riverstone Echo Rollover GP, LLC (“Echo Rollover GP”). ECF GP is the general partner of Riverstone Echo Continuation Holdings, L.P. (“Echo Continuation Holdings”). Echo Rollover GP is the general partner of Riverstone Echo Rollover Holdings, L.P. (“Echo Rollover Holdings”). Riverstone Enviva Holdings is managed by its members, Echo Continuation Holdings and Echo Rollover Holdings.
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(4)Riverstone Enviva Holdings is the sole member of Holdings GP, which is the general partner of Enviva Holdings, which is the sole member of each of (i) Enviva MLP Holdco, which is the record holder of 7,578,921 Common Units and a 100% limited liability company interest in the general partner, and (ii) Enviva Cottondale, which owns a 100% limited liability company in Enviva Collateral PledgeCo, LLC (together with Enviva MLP Holdco, the “Common Unit Holders”) which is the record holder of 6,007,454 common units.
(5)(3)As reported in a Schedule 13D13D/A filed with the SEC on AugustJanuary 4, 2020,2022, Inclusive Capital Partners, L.P. (“In-Cap”) and Inclusive Capital Partners Spring Fund Manager, L.L.C. (“In-Cap Spring Fund Manager”) or Inclusive Capital Partners Spring Fund Manager II, L.L.C. (“In-Cap Spring Fund II Manager”), have been granted investment and voting discretion over the common unitsstock held by Inclusive Capital Partners Spring Master Fund, L.P. (f/k/a ValueAct Spring Master Fund, L.P.), a British Virgin Islands limited partnership (“In-Cap Spring Master Fund”certain funds (the “In-Cap Funds”). In-Cap acts as investment manager to the In-Cap Spring Master Fund.Funds. The managing member of In-Cap Spring Fund Manager and In-Cap Spring Fund II Manager is Inclusive Capital Partners Holdco, L.P., a Delaware limited partnership (“In-Cap Holdco”). In-Cap is the general partner of In-Cap Holdco. Inclusive Capital Partners, L.L.C., a Delaware limited liability company (“In-Cap LLC”), is the general partner of In-Cap. Mr. Ubben is the controlling member of the management committee of In-Cap LLC. The addressMr. Ubben holds shares of common stock for the business officebenefit of In-Cap and the In-Cap Spring Fund Manager,In-Cap Spring Master Fund, In-Cap Holdco, In-Cap LLC and Mr. Ubben is 572 Ruger Street, Suite B, San Francisco, CA 94129.Funds.
(6)(4)Of these 188,858225,204 shares of common units,stock, 165,928 are held by the Bumgarner Family Trust. Mr. Bumgarner has investment control over these units.shares.
Equity Compensation Plan Information
The following table sets forth information with respect to the securities that may be issued under the Enviva Partners, LPInc. Long-Term Incentive Plan (the “LTIP”) as of December 31, 2020.2021.
Plan categoryPlan categoryNumber of securities to be issued upon exercise of outstanding options, warrants and rights (a)(2)Weighted- average exercise price of outstanding options, warrants and rights ($) (b)(3)Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)(4)Plan categoryNumber of securities to be issued upon exercise of outstanding options, warrants and rights (a)(2)Weighted- average exercise price of outstanding options, warrants and rights ($) (b)(3)Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)(4)
Equity compensation plans approved by security holders(1)Equity compensation plans approved by security holders(1)1,815,827 n/a124,436 Equity compensation plans approved by security holders(1)1,678,838 n/a3,004,888 
Equity compensation plans not approved by security holders(2)Equity compensation plans not approved by security holders(2)— — — Equity compensation plans not approved by security holders(2)— — — 
TotalTotal1,815,827 n/a124,436 Total1,678,838 n/a3,004,888 
(1)The LTIP was approved by the board of directors of our General Partnerthe former GP prior to the IPO.IPO of Enviva Partners, LP.
(2)We do not have any equity compensation plans that were not approved by our shareholders. The LTIP was amended in January 2020 and January 2021 to increase the number of shares of common unitsstock that may be issued thereunder.thereunder and was amended and restated as of December 31, 2021 in connection with the Conversion. The amendments to the LTIP did not require shareholder approval under the rules of the NYSE.
(3)The amount in column (a) of this table reflects (i) the aggregate number of shares of common unitsstock issuable upon settlement of outstanding time-based phantomrestricted stock units and (ii) the aggregate number of shares of common unitsstock issuable upon settlement of outstanding performance-based phantomrestricted stock units assuming a 100% performance factor pursuant to the LTIP as of December 31, 2020.2021. The actual number of shares of common unitsstock that may be issued in settlement of outstanding performance-based phantomrestricted stock unit awards is based on a factor of between 0% and 200%. Each outstanding restricted stock unit award reflected within this column (a) represented a time-based or performance-based phantom unit award which was converted to a time-based or performance-based restricted stock unit award, as applicable, on a one-for-one basis in connection with the Conversion.
(4)This column is not applicable because only phantom units (prior to the Conversion) and restricted stock units (following the Conversion) have been granted under the LTIP and phantom units and restricted stock units do not have an exercise price.
(5)The amount in this column reflects the total number of shares of common unitsstock remaining available for future issuance under the LTIP as of December 31, 2020.2021. For additional information about the LTIP and the awards granted thereunder, please read Part III, Item 11. “Executive Compensation.”
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ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
As of February 15, 2021, our sponsor owned 13,586,375 common units representing an approximate 34% limited partner interest in us and owns all our incentive distribution rights. In addition, our sponsor owns and controls (and appoints all the directors of) our General Partner, which maintains a non-economic general partner interest in us.
The terms of the transactions and agreements disclosed in this section were determined by and among affiliated entities and, consequently, arewere not the result of arm’s-length negotiations. Thesenegotiations, thus presenting the risk that their terms arewere not necessarily at least as favorable to the parties to these transactions and agreementsinvolved as the terms that could have been obtained from unaffiliated third parties.
Distributions The foregoing descriptions are not complete and Paymentsare subject to Our General Partner and Its Affiliates
We generally make 100% of our cash distributionsqualified in their entirety by reference to our unitholders, including affiliates of our General Partner. In addition, if distributions exceed the minimum quarterly distribution and other higher target distribution levels, our sponsor, or the holder of our incentive distribution rights, will be entitled to increasing percentagesfull text of the distributions, up to 50.0% of the distributions above the highest target distribution level.
Assuming we have sufficient cash available for distribution to pay the full minimum quarterly distribution on all of our outstanding common units for four quarters, our General Partner and its affiliates would receive total annual distributions of approximately $22.4 million on their common units.
Our General Partner does not receive a management fee or other compensation for its management of our partnership, but we reimburse our General Partner and its affiliates for all direct and indirect expenses they incur and payments they make on our behalf. These expenses include salary, bonus, incentive compensation and other amounts paid to persons who perform services for us or on our behalf and expenses allocated to our General Partner by its affiliates. Under our management services agreements, (“MSAs”) with Enviva Management Company, LLC, a Delaware limited liability company and wholly owned subsidiary of our sponsor (together with its affiliates that provide services to us,which are included as applicable, “Enviva Management Company”), we are obligated to reimburse Enviva Management Company for all direct or indirect costs and expenses incurred by, or chargeable to, Enviva Management Company in connection with its provision of services necessary for the operation of our business. If the MSAs were terminated without replacement, or our General Partner or its affiliates provided services outside of the scope of the MSAs, our partnership agreement would require us to reimburse our General Partner and its affiliates for all expenses they incur and payments they make on our behalf. Our partnership agreement does not set a limit on the amount of expenses for which our General Partner and its affiliates may be reimbursed.
If our General Partner withdraws or is removed, its non-economic general partner interest will either be sold to the new general partner for cash or converted into common units, in each case for an amount equal to the fair market value of those interests.
If we are ever liquidated, the partners, including our General Partner, will be entitled to receive liquidating distributions according to their respective capital account balances.exhibits hereto.
Agreements with Affiliates
Greenwood Contribution Agreement and Off-Take Contracts Assignment
On July 1, 2020, we acquired from our sponsor all of the limited liability company interests in Enviva Pellets Greenwood Holdings II, LLC (“Greenwood Holdings II”), the indirect owner of Enviva Pellets Greenwood, LLC, (“Greenwood”) which owns a wood pellet production plant in Greenwood, South Carolina (the “Greenwood plant”), for a purchase price of $132.0 million, subject to certain adjustments (such transaction, the “Greenwood Drop-Down”). On July 1, 2020, we paid cash consideration of $129.7 million, net of an initial purchase price adjustment of $2.3 million. Greenwood Holdings II’s liabilities included a $40.0 million, third-party promissory note bearing interest at 2.5% per year that we assumed from our sponsor at closing. We also assumed a railcar lease agreement related to the operation of the Greenwood plant from our sponsor.
On the date of the Greenwood Drop-Down, our sponsor assigned five biomass off-take contracts to us (collectively, the “Associated Off-Take Contracts”). The Associated Off-Take Contracts call for aggregate annual deliveries of 1.4 million metric tons per year (“MTPY”) and mature between 2031 and 2041. Our sponsor also assigned to us fixed-rate shipping contracts with aggregate annual shipping volume of 1.4 million MTPY.
Payments to Riverstone for Affiliated Director Services
Beginning in 2019, we paid Riverstone/Carlyle Management LP, an affiliate of our former sponsor, compensation for the services of the officers or employees of Riverstone Holdings LLC or its affiliates who serveserved as directors on the board of directors of our former General Partner, as well as for services provided by Mr. Lansing. During the year ended December 31, 2021, total compensation related to such expense was $0.6 million.
Agreement and Plan of Merger
On October 14, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, its former sponsor, Enviva Partners Merger Sub, LLC, and the limited partners of its former sponsor set forth in the Merger Agreement (the “Holdings Limited Partners”). Pursuant to the terms of the Merger Agreement, (a) the Company acquired (i) all of the limited partner interests in its former sponsor and (ii) all of the limited liability company interests in Enviva Holdings GP, LLC, the general partner of the Company’s former sponsor, and (b) the incentive distribution rights directly held by Enviva MLP Holdco, LLC, a subsidiary of the Company’s former sponsor, were cancelled and eliminated (collectively, the “Simplification Transaction”). In consideration for the Simplification Transaction, the Company issued 16.0 million common units to the Holdings Limited Partners party to the Merger Agreement.
Acquisition I Merger Agreement
On October 14, 2021, the Company entered into an Agreement and Plan of Merger (the “Acquisition I Merger Agreement”) by and among the Company, Enviva Cottondale Acquisition I, LLC (“Acquisition I”), a subsidiary of affiliates of our former sponsor, Riverstone Echo Continuation Holdings, L.P. and Riverstone Echo Rollover Holdings, L.P. (the “Riverstone Echo Funds”), and Enviva, Inc. Merger Sub, LLC (“Merger Sub”). Pursuant to the Acquisition I Merger Agreement, Acquisition I agreed to merge with and into Merger Sub, with Merger Sub surviving as a wholly owned subsidiary of the Company (the “Acquisition I Merger”). In connection therewith, the Riverstone Echo Funds received 6.0 million common units, which was the number of common units held directly or indirectly by Acquisition I immediately prior to the Acquisition I Merger.
Registration Rights Agreement
The Company entered into a registration rights agreement (the “Registration Rights Agreement”) on October 14, 2021 with the Holdings Limited Partners pursuant to which, among other things and subject to certain restrictions, the Company agreed to file with the SEC a registration statement on Form S-3 registering for resale certain securities received by such Holdings Limited Partners in connection with the Simplification Transaction. The Registration Rights Agreement also provides the Holdings Limited Partners with customary demand and piggyback registration rights.
Echo Blocker Merger Agreement
On October 14, 2021, the Company entered into an Agreement and Plan of Merger (the “Echo Blocker Merger Agreement”) by and among Riverstone EC Corp, LLC (“Echo Blocker”), the Company, Merger Sub, and Riverstone Echo Continuation Fund Parallel, L.P. (“Riverstone Echo Fund Parallel”). Pursuant to the Echo Blocker Merger Agreement, Riverstone Echo Continuation Fund Parallel received a number of shares of the Company’s common stock equal to the number of common units held by Echo Blocker immediately prior to the merger of Echo Blocker with and into Merger Sub.
Support Agreement
In connection with the Simplification Transaction on October 14, 2021, the Company entered into a support agreement (the “Support Agreement”) by and among the Company, the Holdings Limited Partners party thereto, and certain other persons thereto pursuant to which, among other things, (a) certain of our former sponsor’s (or its subsidiaries’) obligations to provide financial support to us were consolidated, fixed, and novated into fixed payment amounts to be paid solely out of dividends on certain shares of common stock held by certain Holdings Limited Partners, (b) each Holdings Limited Partner party thereto
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Generalagreed to reinvest all regular quarterly dividends in respect of a portion of the common stock issued to such Holdings Limited Partner as well asin the Simplification Transaction, for Mr. Lansing. Duringeach calendar quarter from the year endedcalendar quarter ending September 30, 2021, through and including the calendar quarter ending December 31, 2020, total compensation expense related to the directors was $0.6 million.
EVA-MGT Contracts
In January 2016 we entered into a contract with the Hamlet JV to supply 375,000 MTPY of wood pellets (the “EVA‑MGT Contract”) to MGT Teesside Limited’s (“MGT”) Tees Renewable Energy Plant (the “Tees REP”), which is under development. In exchange for a fee, the Partnership amended the EVA-MGT Contract to delay delivery of volumes originally scheduled for 2019 until 20202024, and cancel volumes originally scheduled for 2020. The EVA-MGT contract commenced in 2020, ramps to full supply in 2021 and continues through 2034. The EVA-MGT Contract is denominated in U.S. Dollars for one shipment in 2020 and in British Pound Sterling (“GBP”) for all other shipments. On January 22, 2016, the Partnership entered into a Contingent Novation Agreement relating to the Tees REP with the Hamlet JV and MGT pursuant to which, in the event MGT terminates the MGT Contract or we notify MGT that we wish to terminate the EVA-MGT Contract, MGT may become a(c) each Holdings Limited Partner party to the EVA-MGT Contract in lieu of the Hamlet JV, subject to the terms thereof.
We entered into a second supply agreement (the “Second Supply Agreement”) with the Hamlet JVthereto made certain voting commitments in connection with the acquisition of Enviva Pellets Sampson, LLCConversion and agreed not to supply an additional 95,000 MTPYtransfer any common units held by such partner until the completion of the contracted volumeunitholder vote regarding the Conversion or the Company’s determination to abandon or terminate the Tees REP. Conversion.
Stockholders Agreement
In connection with the Hamlet Drop-Down, on March 20, 2019 we amendedSimplification Transaction, the Second Supply Agreement, whereby option volumes excisable by the Hamlet JV in 2019 were added for the Hamlet JV to meet its delivery obligations under its long-term, take-or-pay off-take contract with MGT (the “MGT Contract”) existing as of the date thereof. In exchange for a fee, we further amended the Second Supply Agreement on November 22, 2019 to cancel certain volumes originally scheduled for 2020. The Secondary Supply Agreement is denominated in GBP, commences in 2021 and continues through 2034.
On August 10, 2016, the Hamlet JVCompany entered into a Fuel Supply Directstockholders’ agreement (the “Stockholders Agreement”) with Riverstone Echo Continuation Holdings, L.P. and Riverstone Echo Rollover Holdings, L.P. and each of their respective affiliates (collectively, the “Riverstone Stockholders”). The Stockholders Agreement related to the MGT Contract together with our sponsor, John Hancock, MGT and Lloyds Bank PLC, acting as security trustee, pursuant to which, among other things, (1) MGT, as borrower, granted securityprovided for the payment of certain liabilities under its financing documents and, on a second-ranking basis, payments to the Hamlet JV under the MGT Contract and certain related documents, and (2) the Hamlet JV, our sponsor and John Hancock consented to MGT granting such security interests and agreed to notify the security trustee of any material default under the MGT Contract or certain other related documents, in all cases subject to the terms thereof.
Off-take Contract
On April 9, 2015, we entered into a master biomass purchase and sale agreement with the Hamlet JV. In connection with the Hamlet Drop-Down, on March 20, 2019 we entered into a new confirmation (the “Confirmation”) thereunder pursuant to which we agreed to purchase all wood pellets produced by the Hamlet plant from commencement of operations through December 31, 2019 and all wood pellets produced by the Hamlet plant but not sold to MGT from January 1, 2020 through June 30, 2020. Additionally, during 2020 we entered into two amendments with the Hamlet JV, pursuant to which we extended the termcomposition of the Confirmation and agreed to purchase approximately 60,000 MT produced byCompany’s initial post-Conversion board of directors. In addition, for so long as the Hamlet plant from July 1, 2020 through August 15, 2020 and all wood pellets produced by the Hamlet plant but not sold to MGT from August 16, 2020 through December 31, 2020. During the year ended December 31, 2020, total wood pellet purchases were $67.0 million.
Registration Rights Agreement - Sponsor
In connection with our initial public offering (“IPO”) on May 4, 2015, we entered into a registration rights agreement with our sponsor pursuant to which we may be required to register the saleRiverstone Stockholders hold at least 30% of the Company’s common units issued (or issuable) to our sponsor. Understock, the registration rights agreement, our sponsor will have piggyback registration rights, subject to certain limitations. The registration rights agreement also includes provisions dealing with indemnification and contribution and allocation of expenses. All common units held by our sponsor or any permitted transferee will be entitled to these registration rights. In accordance with the registration rights agreement, we registered all of our sponsor’s common units for resale, subject to certain limitations, pursuant to our effective registration statement on Form S-3, filed with the SEC on June 21, 2019.
Purchase Rights Agreement
We entered into a purchase rights agreement with our sponsor pursuant to which our sponsorCompany agreed to provide us with a right of first offer to purchase any wood pellet production plant or deep‑water marine terminal that it its subsidiaries or any other entity that it controls, owns and proposes to sell (each, a “ROFO Asset”) for a five-year period. Pursuant to an amendment,would not, without the termapproval of the purchase rights agreement was extended to May 2021 and will automatically renew on an annual basis unless either party provides notice of termination within 60 days prior to the end of the then-current term.
We will have thirty days following receipt of notice of our sponsor entity’s intention to sell a ROFO Asset to propose an offer for the ROFO Asset. If we submit an offer, our sponsor will negotiate with us exclusively and in good faith to enter into a
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letter of intent or definitive documentation for the purchase of the ROFO Asset on mutually acceptable terms. If we are unable to agree to terms within 45 days, our sponsor entity will have 150 days to enter into definitive documentation with a third party purchaser on terms that are,Riverstone Stockholders, undertake certain specified actions set forth in the good faith judgment of our sponsor entity selling such ROFO Assets, superior to the most recent offer proposed by us.Stockholders Agreement.
Management Services Agreements and Fee Waivers
EVA MSA
In AprilFrom 2015 through October 14, 2021, the closing date of the Simplification Transaction, all of our employees and members of management becamewere employed by Enviva Management Company, LLC (“Enviva Management Company”), a wholly owned subsidiary of our former sponsor, and we and our General Partner entered into the EVA MSA. The EVA MSA hasformer general partner were party to a term of five years, which is automatically renewed unless terminated by us for cause. Enviva Management Company is also able to terminate themanagement services agreement if we fail to reimburse it for its costs and expenses allocable to us.
(the “EVA MSA”). Pursuant to the EVA MSA, we reimbursereimbursed Enviva Management Company for all direct or indirect costs and expenses incurred by, or chargeable to, Enviva Management Company in connection with the provision of the services, including salary and benefits of employees engaged in providing such services, as well as office rent, expenses, and other overhead costs of Enviva Management Company. Enviva Management Company determinesdetermined the amount of costs and expenses that iswere allocable to us.
In connection with the Hamlet Drop-Down, we and Enviva Management Company entered into an agreement pursuant to which an aggregate of approximately $13.0 million in fees that otherwise would be owed by us under the EVA MSA will be waived during the period from the closing of the Hamlet Drop-Down through the second quarter of 2020. The agreement expired pursuant to its terms on June 30, 2020.
In June 2019, we entered into an additional agreement with Enviva Management Company (the “Second EVA MSA Fee Waiver”) pursuant to which we received a $5.0 million waiver of fees under the EVA MSA through September 30, 2019 as consideration for an assignment of two shipping contracts to our sponsor to rebalance our and our sponsor’s respective shipping obligations under existing off-take contracts. During the year ended December 31, 2019, $5.0 million of fees expensed under the EVA MSA were waived and recorded as an increase to partners’ capital pursuant to the Second EVA MSA Fee Waiver.
In connection with the Greenwood Drop-Down, we and Enviva Management Company entered into an agreement pursuant to which (1) an aggregate of approximately $37.0 million in management services and other fees that otherwise would be owed by us under our management services agreement with Enviva Management Company will be waived with respect to the period from the closing of the Greenwood Drop-Down through the fourth quarter of 2021 and (2) Enviva Management Company will continue to waive certain management services and other fees during 2022 unless and until the Greenwood plant’s production volumes equal or exceed 50,000 MT in any calendar month, in each case, to provide cash flow support to us during the planned expansion of the Greenwood plant. During the year ended December 31, 2020, $18.0 million of MSA fees were waived, of which $9.9 million was included in cost of goods sold and $8.1 million was included in related-party management services fees in general and administrative expenses.
Hamlet JV MSA
Pursuant to a management services agreement between the Hamlet JV and Enviva Management Company (the “Hamlet JV MSA”), Enviva Management Company providesprovided the Hamlet JV with operations, general administrative, management, and other services. As compensation for Enviva Management Company’s services under the Hamlet JV MSA, the Company payspaid an annual management fee to Enviva Management Company. The Hamlet JV will reimbursereimbursed Enviva Management Company for all reasonable and necessary costs and expenses (other than general and administrative costs) incurred by, or chargeable to, Enviva Management Company.Company
Enviva Tooling MSA
Pursuant to a management services agreement between Enviva Tooling Services Company, LLC (the “Tooling JV”) and Enviva Management Company (the “Tooling JV MSA”), Enviva Management Company provided the Tooling JV with operations, general administrative, management, and other services. As compensation for Enviva Management Company’s services under the Tooling JV MSA, the Company paid an annual management fee to Enviva Management Company as set forth in the Tooling JV’s budget. The Tooling JV reimbursed Enviva Management Company for all reasonable and necessary costs and expenses incurred by, or chargeable to, Enviva Management Company in connection with the services.
Railcar Subleases
During 2021, we agreed to sublease certain railcars from Enviva Pellets Lucedale, LLC, a wholly owned subsidiary of our sponsor.
Software License
Effective May 1, 2021, we took assignment of certain licenses with Microsoft from our former sponsor.
Lucedale and Pascagoula Contribution Agreement and Off-Take Contracts Assignment
On July 1, 2021, we acquired from our former sponsor all of the limited liability company interests in Enviva JV2 Holdings, LLC, the indirect owner of a wood pellet production plant under construction in Lucedale, Mississippi and a deep-water marine terminal under construction in Pascagoula, Mississippi, for a purchase price of $259.5 million, after accounting for certain adjustments (the “Lucedale-Pascagoula Drop-Down”). In connection therewith, our former sponsor also assigned to
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us three long-term, take-or-pay off-take contracts with aggregate annual deliveries of 630,000 MTPY (together with the Lucedale-Pascagoula Drop-Down, the “Acquisitions”).
Lucedale-Pascagoula Drop-Down Make-Whole Agreements
GreenwoodAgreement
On the date of the GreenwoodLucedale-Pascagoula Drop-Down, we entered into a make-whole agreement with our former sponsor, pursuant to which our former sponsor agreed to reimburse us for any construction costs incurred for the planned expansion of the Greenwood plant in excess of $28.0 million. No amounts have been reimbursed as of December 31, 2020.
Hamlet JV
In connection with the Hamlet Drop-Down, on April 2, 2019 we entered into a make-whole agreement with our sponsor, pursuant to which (1) our sponsor agreed to(i) guarantee certain cash flows from the Hamletproduction plant until Juneunder construction in Lucedale, Mississippi during the period from and including the quarter ended on September 30, 2020, (2) our
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sponsor agreed tothe production plant under construction in Lucedale, Mississippi is on the first day of a quarter, four quarters) following the quarter in which the commercial operations date of the production plant under construction in Lucedale, Mississippi occurs (the “Make-Whole Term”) and (ii) reimburse us for construction cost overrunscosts in excess of budgeted capital expenditures for the Hamletterminal at the Port of Pascagoula, Mississippi and production plant under construction in Lucedale, Mississippi, subject to certain exceptions, (3) weexceptions. We also agreed to pay to our former sponsor quarterly incentive payments for any wood pellets produced by the Hamletproduction plant under construction in Lucedale, Mississippi in excess of forecast production levels through June 30, 2020 and (4) our sponsor agreed to retain liability for certain claims payable, if any, by the Hamlet JV. The make-whole agreement expired pursuant to its terms on June 30, 2020. No amounts were reimbursed during the year ended December 31, 2020.Make-Whole Term.
InterimLucedale-Pascagoula Drop-Down Management Services Agreement and GuarantyFee Waiver
In connection with the Hamlet Drop-Down, on April 2, 2019 we entered into an interim services agreement (the “ISA”) with Enviva Hamlet Operator, LLC, a wholly owned subsidiary of our sponsor (“Hamlet Operator”) pursuant to which Hamlet Operator, as an independent contractor, agreed to manage, operate, maintain and repair the Hamlet plant and provide other services to the Hamlet JV for the period fromOn July 1, 2019 through June 30, 2020 in exchange for a fixed fee per metric ton of wood pellets produced by the Hamlet plant during such period and delivered at place to the Wilmington terminal. Under and during the term of the ISA, Hamlet Operator agreed to (1) pay all operating and maintenance expenses at the Hamlet plant, (2) cover all reimbursable general and administrative expenses associated with the Hamlet plant and (3) pay certain other costs and expenses incurred by the Hamlet plant. Our sponsor guarantees all obligations of Hamlet Operator under the ISA. The ISA expired pursuant to its terms on June 30, 2020. During the year ended December 31, 2020, we recognized $27.9 million of expense related to the ISA.
Pursuant to the ISA, the Hamlet JV MSA was suspended during the term of the ISA, and Enviva Management Company waived the management fees payable to Enviva Management Company under the Hamlet JV MSA with respect to such period, which was approximately $2.7 million.
Hamlet JV Revolver
In connection with the Hamlet Drop-Down, on April 2, 2019, our sponsor assigned to us all of its rights and obligations under the amended and restated credit agreement, dated as of June 30, 2018, between the Hamlet JV, as borrower, and our sponsor, as lender. On April 2, 2019, we amended and restated the credit agreement to extend the maturity date of the revolving loans made to the Hamlet JV and increase our commitment as the lender to fund increases in the amount of such loans from $30.0 million to $60.0 million in order to fund capital expenditures and working capital at the Hamlet plant. As of December 31, 2020, the outstanding balance of the Hamlet JV Revolver was $52.2 million due from the Hamlet JV, which was eliminated upon consolidation.
Hamlet JV LLC Agreement
On December 29, 2016, our sponsor and John Hancock entered into the Fourth Amended and Restated Limited Liability Company Agreement of the Hamlet JV (the “Hamlet JV LLCA”). Following the Hamlet Drop-Down and pursuant to the Hamlet JV LLCA, we are the managing member of the Hamlet JV and have the authority to manage the business and affairs of the Hamlet JV and take actions on its behalf, including adopting annual budgets, entering into agreements, effecting asset sales or biomass purchase agreements, making capital calls, incurring debt and taking other actions, subject to John Hancock’s consent in certain circumstances. The Hamlet JV LLCA also sets forth the capital commitments and limitations thereon for each of the members and provides for the allocation of sale proceeds and distributions among the holders of outstanding Class A Units and Class B Units. For more information on capital commitments, please see Item 8—Financial Statements and Supplementary Data, Notes to the Consolidated Financial Statements, (17)—Partners’ Capital—Hamlet JV.
Replacement Pledge Agreement
In connection with the Hamlet Drop-Down, on April 2, 2019 we entered into a pledge agreement in favor of John Hancock pursuant to which, among other things, we pledged our Class B Units in the Hamlet JV to John Hancock in replacement of a corresponding pledge previously made to John Hancock by our sponsor as support for a guaranty previously provided to John Hancock.
Guarantee Fee Agreement
On December 28, 2017, the Hamlet JV entered into a guarantee fee agreement (the “Guarantee Fee Agreement”) with our sponsor pursuant to which our sponsor agreed to guarantee certain obligations of the Hamlet JV under certain equipment leases and shipping contracts related to its business in exchange for certain fees.
Sponsor Indemnification Agreement
In connection with the Hamlet Drop-Down, on April 2, 20192021, we entered into an agreement (the “Sponsor Indemnification Agreement”)with Enviva Management Company, pursuant to which Enviva Management Company agreed to waive an aggregate of $52.5 million in fees that otherwise would have been owned by us under our management services agreement with Enviva Management Company with respect to the period from the closing of the Lucedale-Pascagoula Drop-Down through the fourth quarter of 2023. From January 1, 2022 through December 31, 2024, and prior to the first month during which the production plant under construction in Lucedale, Mississippi produces 62,500 metric tons of wood pellets, Enviva Management Company will waive additional management service fees for any calendar quarter if certain production levels are not met for such quarter. The total amount of such conditional fee waiver is up to $4.0 million.
Shipping Subcharter Agreement and MSA Fee Waivers
During the third quarter of 2021, we entered into an agreement with our former sponsor pursuant to which we agreed to indemnifymake shipments of wood pellets during 2022 and 2023. As consideration, we received a waiver on a portion of fees pursuant to our sponsor for any amounts owed under themanagement services agreement with Enviva Management Company.
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Guarantee Fee Agreement and our sponsor agreed to pay to us any fees it receives from the Hamlet JV for providing guarantees under the Guarantee Fee Agreement. PursuantPrior to the Sponsor Indemnification Agreement, the Partnership also agreed to indemnifySimplification Transaction, we purchased a portion of our sponsor with respect to its obligations under certain guarantee and indemnity agreements with John Hancock related to the Hamlet JV.
Management Services Fee Adjustment Agreement
On March 20, 2019, our sponsor entered into a management services fee adjustment agreement pursuant to which our sponsor agreed to make payments to us in respect of any amounts payable by the Hamlet JV pursuant to the Hamlet JV MSA in excess of the fixed-priced amounts for services established in the ISA. The agreement terminated on April 2, 2019 in accordance with its terms. No payments were made thereunder.
Equipment Transfers
In April 2020, Enviva Pellets Northampton, LLC sold certain equipment to our sponsor for approximately $4.1 million.
Other Transactions with Related Persons
Enviva FiberCo
We purchase raw materials from Enviva FiberCo,Fiberco, LLC (“FiberCo”), a wholly owned subsidiary of our sponsor.
Onformer sponsor, including through a wood supply agreement effective July 1, 2019, we entered into an agreement with2021, whereby FiberCo committed to secure incremental stumpage inventory meeting acceptable specification requirements, above inventory levels held as of June 30, 2021, to supply certain of our plants. For all wood fiber delivered pursuant to whichthe agreement, we agreed to pay a $5 per green short ton (”GST”) premium to market pricing. FiberCo agreed to build specified levelspay deficiency fees of stumpage inventory and we agreed$10 per GST to purchase such inventory during the first and second quarter of 2020 at a fixed-price premium to the then-prevailing market price. Pursuant to such agreement, FiberCo was required to pay us fixed shortfall payments in the event that actual inventory levels fall below the specified levels as of specified dates.
Raw materials purchased during the year endedFiberCo did not satisfy certain volume commitments between July 31 through December 31, 2020 were $7.5 million. No cost of cover deficiency fees were recognized as of December 31, 2020. As of December 31, 2020, $0.3 million is included in related-party payables related to raw materials purchased from FiberCo.
Greenwood Contract
In December 2017, we entered into a master off-take contract with our sponsor (the “Sponsor Off-take Master Agreement”). In February 2018, we entered into a confirmation governed by the Sponsor Off-take Master Agreement with Greenwood. We amended such confirmation in March 2018, July 2019 and January 2020. Under the amended confirmation, we agreed to purchase the wood pellets produced by the Greenwood plant through March 2022 and have a take-or-pay obligation with respect to 550,000 MTPY of wood pellets (prorated for partial contract years) beginning in 2021 and subject to Greenwood’s option to increase or decrease the volume by 10% each contract year.
The Sponsor Off-Take Master Agreement was terminated on July 1, 2020 in connection with the Greenwood Drop-Down. As of December 31, 2020, the net purchased amount under the Greenwood contract was of $18.1 million.
Netting Agreement
We entered into an agreement with our sponsor effective as of September 30, 2019 (the “Netting Agreement”) pursuant to which we agreed to set off related-party accounts receivable and accounts payable; consequently, we intend to set off related-party receivables and payables, which are reflected net in related-party receivables and payables, as applicable, in accordance with the Netting Agreement.2021.
Procedures for Review, Approval and Ratification of Transactions with Related Persons
In connection with the closing ofConversion, our IPO, the board of directors ofadopted our General Partner adopted policies for the review, approval and ratification of transactions with related persons. The board adopted a written Code of Business Conduct and Ethics, underpursuant to which certain conflicts or potential conflicts of interest that may arise between Enviva, on the one hand, and any director, officer, or employee of Enviva (each, a director is required to bring“Covered Person”), on the other, must be brought to the attention of the board of directors if the Covered Person has (i) a direct interest in any such conflict where the amount involved exceeds $120,000 or potential conflict of(ii) a material indirect interest that may arise between the director orin any affiliate of the director, on the one hand, and us or our General Partner on the other.such conflict. The resolution of any such conflict or potential conflict should, at the discretion of the board in light of the circumstances, be determined by a majority of the disinterested directors.
Under the provisions of our Code of Business Conduct and Ethics, any executive officer will be required to avoid conflicts of interest unless approved by theour board of directors of our General Partner.
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The Code of Business Conduct and Ethics described above was adopted in connection with the closing of our IPO and, as a result, the transactions described above that were entered into prior to or in connection with the IPO were not reviewed according to such procedures.
The board has also adopted a Conflicts of Interest Policy, under which if a conflict or potential conflict of interest arises between our General Partner or its affiliates, on the one hand, and us or our unitholders, on the other hand, the resolution of any such conflict or potential conflict should be addressed by the board of directors of our General Partner in accordance with the provisions of our partnership agreement. At the discretion of the board in light of the circumstances, the resolution may be determined by the board in its entirety or by a conflicts committee meeting the definitional requirements for such a committee under our partnership agreement.
The Conflicts of Interest Policy provides that the board may approve certain contracts (“Affiliated Contracts”) between us, on the one hand, and the General Partner and any of its affiliates, on the other hand, so long as the board reasonably determines that such contracts are on terms (in the aggregate) not less favorable to us than could be obtained on an arm’s‑length basis from an unrelated third party, taking into account the totality of the circumstances involved.
The Conflicts of Interest Policy also provides that either of the Chief Executive Officer or the Chief Financial Officer (each, an “Approving Officer”) of our General Partner have the authority, without prior board approval but subject to board review, to approve certain Affiliated Contracts involving asset transfers, services related to the production, storage, terminaling or transportation of biomass, or leases in order to promote the proper functioning of our day-to-day business affairs so long as the applicable Approving Officer and the General Counsel of our General Partner determine, after reasonable inquiry, that such Affiliated Contracts are on terms (in the aggregate) not less favorable to us than could be obtained on an arm’s‑length basis from an unrelated third party, taking into account the totality of the circumstances involved.directors.
Director Independence
See Part III, Item 10. “Directors, Executive Officers, and Corporate Governance” for information regarding theour directors of our General Partner and independence requirements applicable to theour board of directors of our General Partner and its committees.
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ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES
Ernst & Young LLP (“EY”), Tyson, Virginia, Auditor Firm ID: 42, served as our independent auditors during the years ended December 31, 20202021 and 2019,2020, respectively. The following table presents fees paid for professional audit services of our annual consolidated financial statements and for other services for the years ended December 31, 20202021 and 2019.2020.
Year Ended December 31, Year Ended December 31, 
(in thousands)20202019
20212020
(in thousands)
Audit fees(1)
Audit fees(1)
$2,218 $1,439 
Audit fees(1)
$3,100 $2,218 
Audit related fees(2)
Audit related fees(2)
860 10 
Audit related fees(2)
125 860 
All other fees(3)
All other fees(3)
10 11 
All other fees(3)
10 
TotalTotal$3,088 $1,460 Total$3,230 $3,088 
____________________________________________
(1)Fees for financial statement audit and review services customary under generally accepted auditing standards or for the purpose of rendering an opinion or review on the financial statements related to the fiscal year then ended.
(2)Fees for assurance and related services traditionally performed by independent accountants, including internal control reviews, audits in which we engaged related to an acquisition and to a less-than-wholly subsidiary, and work performed in connection with a registration statement or issuance of a comfort letter.
(3)Fees for use of the EY global accounting and financial reporting research tool.
Policy for Approval of Audit and Permitted Non-Audit Services
Before the independent registered public accounting firm is engaged by us or our subsidiaries to render audit or non‑audit services, the audit committee must pre-approve the engagement. Audit committee pre-approval of audit and non-audit services is not required if the engagement for the services is entered into pursuant to pre-approval policies and procedures established by the audit committee. The chairman of the audit committee has the authority to grant pre-approvals, provided such approvals are within the pre-approval policy and presented to the audit committee at a subsequent meeting.
The audit committee approved the appointment of EY as our independent auditor to conduct the audit of our consolidated financial statements for the year ended December 31, 20202021 and all of the services described above.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)    Certain documents are filed as a part of this Annual Report and are incorporated by reference and found on the pages below.
1.Financial Statements—Please read Part II, Item 8. “Financial Statements and Supplementary Data—Index to Financial Statements.”
2.    All schedules have been omitted because they are either not applicable, not required or the information called for therein appears in the consolidated financial statements or notes thereto.
3.    Exhibits—Exhibits required to be filed by Item 601 of Regulation S‑K set forth below are incorporated herein by reference.
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EXHIBIT INDEX
Exhibit Number    Exhibit
2.1 
2.2
2.3
2.4
2.5
2.6
3.1 
3.2 
3.3
3.4*
4.1 
4.2
4.3
4.4
4.5
4.6*4.3*
10.1*4.4
4.5
10.1
10.2
10.3
10.4†
10.5†10.2† 
10.610.3 
10.7
10.8
10.9
10.10†
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Exhibit NumberExhibit
10.11†
10.12†

10.13†

10.14
10.1510.5
10.6
10.1610.7†
10.8†
10.9†
10.10†
10.11
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Exhibit NumberExhibit
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19

10.18†*10.20†
10.21
10.22
10.23
10.24
10.25*†
10.19†*
10.20*†
10.21*10.26*
10.22*10.27*†
10.28*†
10.29*
10.23*†
10.24*†
10.25*†
10.26*†
10.27†10.30
10.28†
10.29*10.31†
10.32†
10.33*
10.30*10.34*
10.31*10.35*
10.36*†
10.32*†10.37
16.1
21.1* 
23.1*
23.2*
24.1* Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10‑K)
31.1* 
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Exhibit NumberExhibit
31.2* 
32.1** 
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Exhibit NumberExhibit
32.2** 
101 The following financial information from Enviva Partners, LP’sInc.’s Annual Report on Form 10-K for the year ended December 31, 20202021 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income (Loss),Loss, (iv) the Consolidated Statements of Changes in Partners’ Capital,Equity, (v) the Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements.
104 Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101)
____________________________________________
*    Filed herewith.
**    Furnished herewith.
†    Management Contract or Compensatory Plan or Arrangement
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
   
 ENVIVA PARTNERS, LPINC.
  
 By:Enviva Partners GP, LLC, as its sole general partner
   
Date: February 25, 2021March 4, 2022By:/s/ JOHN K. KEPPLER
  John K. Keppler
  
Title: Chairman, President and Chief Executive Officer
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of William H. Schmidt, Jr. and Jason E. Paral as his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, and each of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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Name    TitleDate
    
/s/ JOHN K. KEPPLER Chairman, President and Chief Executive OfficerFebruary 25, 2021March 4, 2022
John K. Keppler (Principal Executive Officer)
    
/s/ SHAI S. EVEN Executive Vice President and Chief Financial OfficerFebruary 25, 2021March 4, 2022
Shai S. Even (Principal Accounting Officer and Principal Financial Officer)
    
/s/ MICHAEL A. JOHNSONVice President and Chief Accounting OfficerMarch 4, 2022
Michael A. Johnson(Principal Accounting Officer)
/s/ RALPH ALEXANDER DirectorFebruary 25, 2021March 4, 2022
Ralph Alexander 
    
/s/ JOHN C. BUMGARNER, JR. Director February 25, 2021March 4, 2022
John C. Bumgarner, Jr.  
     
/s/ MARTIN N. DAVIDSONDirectorMarch 4, 2022
Martin N. Davidson
/s/ JIM H. DERRYBERRY Director February 25, 2021March 4, 2022
Jim H. Derryberry  
     
/s/ CHRISTOPHER B. HUNTFAUZUL LAKHANIDirectorMarch 4, 2022
Fauzul Lakhani
/s/ GERRIT L. LANSING, JR. Director February 25, 2021March 4, 2022
Christopher B. HuntGerrit L. Lansing, Jr.
/s/ PIERRE F. LAPEYRE, JR.DirectorMarch 4, 2022
Pierre F. Lapeyre, Jr.  
    
/s/ GERRIT L. LANSING, JR.DAVID M. LEUSCHENDirectorFebruary 25, 2021March 4, 2022
Gerrit L. Lansing, Jr.David M. Leuschen
/s/ WILLIAM K. REILLYDirectorFebruary 25, 2021
William K. Reilly
     
/s/ JEFFREY W. UBBEN Director February 25, 2021March 4, 2022
Jeffrey W. Ubben  
     
/s/ GARY L. WHITLOCKDirectorFebruary 25, 2021March 4, 2022
Gary L. Whitlock
/s/ JANET S. WONGDirectorMarch 4, 2022
Janet S. Wong
/s/ EVA T. ZLOTNICKA Director February 25, 2021March 4, 2022
Janet S. WongEva T. Zlotnicka  
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