Exhibit 99.1
Enviva Partners, LP Business Overview Last Updated:January 6, 2017
Forward-Looking Statements and Cautionary Statements Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the securities laws. All statements, other than statements of historical fact, included in this presentation that address activities, events or developments that Enviva Partners, LP (NYSE: EVA) (“Enviva,” “we,” or “us”) expects, believes or anticipates will or may occur in the future are forward-looking statements. The words “believe,” “expect,” “may,” “estimates,” “will,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. However, the absence of these words does not mean that the statements are not forward-looking. These statements are based on certain assumptions made by Enviva based on management’s expectations and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Although Enviva believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies that are difficult or impossible to predict and are beyond its control, Enviva cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions. A number of the assumptions on which these forward-looking statements are based are subject to risks and uncertainties, many of which are beyond the control of Enviva, and may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These risks and uncertainties include the factors discussed or referenced in our filings with the Securities and Exchange Commission (the “SEC”), including the Annual Report on Form 10-K and the Quarterly Reports on Form 10-Q most recently filed with the SEC, including those risks relating to financial performance and results, economic conditions and resulting capital restraints, availability of sufficient capital to execute Enviva’s business plan, the ability of Enviva to complete acquisitions and realize the anticipated benefits of such acquisitions, impact of compliance with legislation and regulations and other important factors that could cause actual results to differ materially from those projected. When considering the forward-looking statements, you should keep in mind the risk factors and other cautionary statements in such filings. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which such statement is made, and Enviva undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. All forward-looking statements attributable to Enviva are qualified in their entirety by this cautionary statement. Industry and Market Data This presentation has been prepared by Enviva and includes market data and other statistical information from third-party sources, including independent industry publications, government publications or other published independent sources. Although Enviva believes these third-party sources are reliable as of their respective dates, Enviva has not independently verified the accuracy or completeness of this information. Some data is also based on Enviva’s good faith estimates, which are derived from its review of internal sources as well as the third-party sources described above. 2
Company Highlights:High-Growth, “Drop-Down” MLP • • • • Critical supply chain partner for major power generators worldwide More than 40% of renewable energy production in the EU is from solid biomass1 Supportive multinational regulatory frameworks result in forecasted demand growing at 16% CAGR through 20202 Supply not adequate for demand with few providers of scale • • • • Fully-contracted, strategically located production plants and a deep-water marine terminal Strong fiber baskets deliver low-cost, growing natural resource and stable pricing Embedded low cost to-port logistics and favorable long-term fixed-rate shipping contracts Experiencing 1% - 2% annual productivity increase in production • • Sales strategy is to fully contract our production capacity under long-term agreements Acquired two off-take contracts as part of the Sampson drop-down transaction in December 2016, and recently executed an agreement to supply a biomass-fueled combined heat and power facility in Martinique Take-or-pay contracts with creditworthy utilities and large-scale power generators with weighted average remaining term of 9.7 years and a contracted revenue backlog of $5.7 billion3 • • • • • Expect aggregate distributions for 2017 of at least $2.35 per unit4 Completed drop-down acquisition of the Sampson plant and associated contracts in December 2016 Sponsor’s Port of Wilmington terminal is operational and expect to have an opportunity to acquire it in 2017 Sponsor actively developing additional plants and terminals due to additional demand expected in Europe and Asia • • • Management team led by industry founders and seasoned public company executives Demonstrated expertise acquiring, building, operating, and contracting / re-contracting platform assets Management rewarded for sustained growth in per-unit distributable cash flow (1) (2) (3) (4) Eurostat – Energy Statistics – quantities (t_nrg_quant); 2014 solid biofuels (excluding charcoal); 2014 renewable energies Hawkins Wright: The Outlook for Wood Pellets – Demand, Supply, Costs and Prices; Third quarter 2016 As of January 1, 2017 On November 3, 2016, provided guidance of aggregate distributions for 2017 of at least $2.35 per unit 3 Experienced Management Team Substantial Growth Opportunities Long-Term Off-take Contracts Advantaged Assets World’s largest supplier of utility-grade wood pellets to major power generators with almost 3 million metric tons per year (“MTPY”) of contracted production capacity Compelling Industry Fundamentals
Enviva Solves a Growing, Unmet Challenge for Generators Major industrial economies in the UK and EU are far short of binding, national-level 2020 renewable targets • 2030 targets even more stringent Wood pellets provide low-cost, drop-in solution, driving large demand Austerity challenges, desire to eliminate coal, grid stability issues, and sustainability requirements limit alternatives… …But existing coal assets can be quickly and cost-effectively converted to biomass Market growing rapidly: demand forecasted at ~16% CAGR to 2020 (3) Enviva is Only Enterprise Supplier of Scale In addition to renewables targets, Japan is addressing capacity shortage issues following the Fukushima nuclear disaster 2020 Industrial Pellet Volumes (in millions MTPY) (3) 100% 30 North America Asia 0.1 75% Wind ore 50% ind Europe ss 25% Nuclear 0% NL UK BEL FR GER % Short DK £0 £50 £100 £150 £200 % of Target (1) Eurostat News Release – February 10, 2016; Share of renewables in energy consumption in the EU rose further to 16% in 2014. (2) Aurora Energy Research – Comparing energy technologies (February 2016) with data from DECC Electricity Generation Costs (December 2013). Total Cost of Energy (TCOE) is the per-megawatthour cost of building and operating a generating plant over an assumed financial life including intermittency value, security of supply value, balancing costs, and transmission costs. Data is for the UK and may not be representative of all the markets in which we or our customers operate. (3) Hawkins Wright: The Outlook for Wood Pellets – Demand, Supply, Costs and Prices; Third quarter 2016 4 Solar Offshore sion Onsh W Bioma Conver 5.1 Supply Gap 6.7 24 18 22.0 Identified Supply 20.5 12 6 0 Demand Supply 2020 61% 53% 38% 38% 23% 3% Total Cost of Energy (per MWh)(2) Progress To Binding 2020 Renewables Targets (1)
Familiar Midstream Activities Truck Pipeline Rail Vessel Processing Washing Fractionating BP Valero Wellhead Oil, Gas, NGL, Coal Refineries Generators Drax Dong Engie Processing Drying Densifying Truck Rail Vessel Wood Fiber • • • Enviva performs activities similar to other midstream MLPs No direct exposure to crude oil or natural gas prices Qualifying income generated by aggregating a natural resource (timber), processing it into fuel at production facilities, transporting pellets to deep water marine storage terminals, and delivering ratably to utility customers (Private Letter Ruling received in 2011) 5 RENEWABLE CONVENTIONAL GATHERING GATHERING STORAGE STORAGE DOWNSTREAM MIDSTREAM UPSTREAM
Enviva’s Port of Chesapeake Marine terminal Compelling Industry Fundamentals
Our Product is the Low-Cost, Drop-In Solution for Coal All figures £/MWh Solar5 Offshore Wind Onshore Wind Nuclear Biomass Conversion Biomass increasingly perceived as the cost-effective, essential complement to other renewables 0.8 0.7 0.3 (1) Enviva (2) CME Group (3) Union Pacific (4) Aurora Energy Research – Comparing energy technologies (February 2016) with data from DECC Electricity Generation Costs (Decembe r 2013). LCOE (Levelized Cost of Electricity) is the per-megawatthour cost of building and operating a generating plant over an assumed financial life. Total Cost of Energy (TCOE) is LCOE plus intermittency value, security of s upply value, balancing costs, and transmission costs. Data is for the UK and may not be representative of all the markets in which we or our customers operate. (5) Large scale PV 7 Intermittency Value Adjustment Security of Supply Value Adjustment Balancing Costs Transmission Costs 4.5 1.3 2.8 17.9 7.6 0.9 9.0 3.8 1.7 (1.7) Net System Cost Delta26.514.18.90(1.1) LCOE12210115890108 TCOE14911516790107 Total Cost of Energy4 (TCOE) Wood Pellet vs. Coal Attributes Wood Pellets (1) NYMEX CAPP Coal (2) Southern PRB Coal (3) Median Heat Content (BTU/lb) 8,000 12,000 8,600 Moisture 4 – 10% < 10% 26 – 30% Ash 0 – 2% < 13.5% 4.6 – 5.7% Sulfur 0 – 0.15% < 1.0% < 1.0%
Lower Greenhouse Gases United Nations report: “greenhouse gas emissions from coal are 4 times greater than forest wood bioenergy on a lifecycle basis” European Union report: “the vast majority of the biomass used today in the EU for heat and power are considered to provide significant greenhouse gas savings compared to fossil fuels” Source: IPCC, 2014: Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change Source: State of play on the sustainability of solid and gaseous biomass used for electricity, heating and cooling in the EU. European Commission. July 2014. Carbon Savings: “The GHG intensity of pellet based electricity is 74% to 85% lower than that of coal-based electricity” Authors include Chair of EPA’s Scientific Advisory Board Panel for Biogenic Carbon Source: Khanna et al. Carbon savings with transatlantic trade in pellets: accounting for market-driven effects. 2015. Oak Ridge National Laboratory scientists: 100 U.S. Forest Scientists: “The carbon benefits of sustainable forest biomass energy are well established” “a robust body of research confirms that forests that are sustainably managed for wood products and energy are associated with long-term reductions in atmospheric carbon dioxide” Source: Dale et al. Ecological objectives can be achieved with wood-derived bioenergy. The Ecological Society of America. 2015. Source: Letter to Gina McCarthy, Administrator, EPA, from professors affiliated with the National Association of University Forest Resource Programs. November 14, 2014. 8
Our Activities Sustain Thriving, Healthy Forests management practices”2 regarding the Enviva Forest Conservation Fund, a $5 million, 10-year bottomland forests in Virginia and North Carolina. This program is 1. 2. 3. Galik and Abt, Sustainability Guidelines and Forest Market Response: as assessment of European Union pellet demand in the Southeastern Unite d States. ECB Bioenergy. 2015. Modeled projection of forest response. March 28, 2016 – Letter from Tom Vilsack, U.S. Secretary of Agriculture, to Amber Rudd, (former) UK Secretary of State for Energy and Climate Change USDA - http://blogs.usda.gov/2015/06/08/study-finds-increasing-wood-pellet-demand-boosts-forest-growth-reduces-greenhouse-gas-emissions-creates-jobs/. 2015 9 “Enviva is ensuring that North Carolina’s bottomland forests will be sustained and protected for generations to come” - The Honorable Pat McCrory, Governor of North Carolina (former), program designed to protect tens of thousands of acres of sponsored by Enviva Holdings, LP. Certifications and Ongoing Audits by Independent Agencies: “We show a substantial increase in the area of all forest types in the presence of increased pellet demand”1 - Duke University & NC State University “The U.S. wood pellet industry increases our forested area, reduces greenhouse gas emissions, and improves U.S. forest - Tom Vilsack, U.S. Secretary of Agriculture “An industry that can reduce greenhouse gas emissions, increase forest growth, and create jobs sounds too good to be true. But that is the reality of the emerging wood pellet market in the Southern U.S.”3 -USDA Acting Chief Economist Robert Johansson
Market Seeing Regulatory Stability and Orderly Growth Biomass energy providing a compelling answer to the energy “trilemma” of cost, decarbonization, and grid stability Baseload / dispatchable characteristics of biomass power seen as a major advantage as electricity systems are placed under strain U.K. and EU policy-makers focused on improving financial discipline on a “total cost” basis, leading to more competition among renewables, which biomass can win Asian market maturing towards long-term supply contract structure, and can be cost-competitively supplied from the Southeastern U.S. Biomass co-firing of U.S. coal fleet can extend plant lives, preserve jobs, benefit rural economies and help the U.S. meet COP-21 Paris Agreement targets 10 5 Growing Asian Demand Driven by New Feed-In Tariffs, Capacity Needs, and Renewable Energy Standards 4 3 “In the same way generators should pay the cost of pollution, we also want intermittent generators to be responsible for the pressures they add to the system when the wind does not blow or the sun does not shine.” Amber Rudd, November 2015 UK Secretary of State for Energy and Climate Change (former) 2 1 Policy characteristics for Enviva’s target markets Northern European countries where Enviva’s long-term contracted customers are based
Supply Gap Created by Multiple Hurdles to Entry LIMITED SUPPLY CHAIN INFRASTRUCTURE CAPITAL INVESTMENT REQUIRED IN: Concentrated Customer Generation Set Fragmented Natural Resource Base Fiber Logistics Plant Ship Terminal Deep Process Capabilities Required Wood Aggregation Truck / Rail Loading Size Reduction Wood Receiving & Storage Debarking & Chipping Port Storage Shipping Drying Pelleting Commitment to Excellence in Safety, Sustainability & Reliability 11 •Long-term, fixed-price shipping contracts with reputable logistics providers •Off-take contract pricing escalators enable long-term margin stability and mitigate exposure to uncontrollable changes to cost position •Plants strategically located in one of the most attractive wood fiber regions in the world •Proximity to terminals results in low “to-port” transportation costs •Cost-effective transportation due to ownership and/or control of ports
Limited Competition • Pellet industry historically characterized by fragmented worldwide supply base Utility trade almost exclusively one-to-one agreements between standalone plants (Thousands of MTPY) Enviva (U.S.)* Graanul Invest (Baltic States) Pinnacle Pellet (Canada) German Pellets (U.S.) Drax Biomass (U.S.) Georgia Biomass (U.S.) FRAM Renewable Fuels (U.S.) Rentech (Canada) Pacific Bioenergy (Canada) Colombo (U.S.) Tanac (Brazil) Westervelt (U.S.) • • Enviva distinguishes itself with an industrial, enterprise-scale approach – Carefully assembled team of foresters, manufacturing experts, logisticians, and engineers Multi-plant profile allows for optimization Years of operational knowledge, employs a “build and copy” approach Conservative balance sheet Multi-billion dollar financial investors experienced in energy and wood products sector – – 0 600 1,2001,800 2,400 3,000 United States* – – Baltic States Canada Europe Russia and Eastern Europe Rest of the World 0 2,000 4,000 6,000 8,000 10,000 Current capacity Under construction or financed for completion by 2018 Source: Hawkins Wright: The Outlook for Wood Pellets – Demand, Supply, Costs and Prices; Third quarter 2016 * Includes the Sampson plant, but does not include the Hamlet plant (financed and in detailed design) or other production plants being developed by the Sponsor or the joint venture. ¹ Hawkins Wright supply and demand data. Assumption of $220/ton of installed capacity 12 Industry growth supports $1.5 billion additional investment opportunity for experienced and well-capitalized operator(1) Worldwide Industrial Pellet Producers and Regional Production
Enviva’s Production Facility in Northampton, NC Advantaged Assets
Assets at a Glance Bethesda, MD Southampton, VA – 510K Port of Chesapeake, VA – 90K Northampton, NC – 510K Ahoskie, NC – 370K Sampson, NC – 500K Port of Wilmington, NC – 90K Amory, MS – 110K Cottondale, FL – 700K Port of Panama City, FL – 32K Port of Mobile, AL – 45K+ Location: Mobile, AL, Cooper Marine & Timberlands ChipCo Terminal Storage: Dome storage with 90K MT of capacity Startup: 3rd Party Agreement Startup: 2016, under agreement with our Sponsor 14 Port of Mobile Startup: 3rd Party Agreement Storage: Flex barge storage with 45K+ MT of capacity Port of Chesapeake Location: Chesapeake, VA, wholly-owned by Enviva Startup: November 2011 Port of Panama City Location: Panama City, FL, Port Panama City Storage: Flat warehouse storage with 32K MT of capacity Port of Wilmington Location: Wilmington, NC, Enviva Port of Wilmington Storage: Dome storage with 90K MT of capacity Storage and Terminaling Assets Plant - Enviva Partners, LP Port - Enviva Partners, LP Enviva Headquarters Current Production Plants Amory Location: Amory, MS Startup: August 2010 (acquired) Annual Production: 110K MTPY Ahoskie Location: Ahoskie, NC Startup: November 2011 Annual Production: 370K MTPY Southampton Location: Southampton, VA Startup: October 2013 Annual Production: 510K MTPY Northampton Location: Northampton, NC Startup: April 2013 Annual Production: 510K MTPY Sampson Location: Sampson, NC Startup: November 2016 Annual Production: 500K MTPY, expected to increase to 600K MTPY in 2019 Cottondale Location: Cottondale, FL Startup: May 2008 (acquired January 2015) Annual Production: 700K MTPY
Advantaged Assets Port of Chesapeake, VA Southampton, VA Northampton, NC Ahoskie, NC Hardwood Roundwood Pine Roundwood Open / Farmland 1MM tons annual facility demand 475MM+ tons inventory 8MM+ tons net annual fiber excess (1) 65,000+ private landowners 1.4MM MT+ consolidated annual throughput ~75mi average distance to port Dedicated, Low-Cost, Haul to Wholly-Owned Terminal $50 $40 $15 $12 $30 $20 $10 $9 Enviva’s 1.4MM Tons $6 $3 $-$0 250 500 750 1,0001,2501,5001,7502,000 MTPY of Pellet Throughput 2,250 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 (1) FIA Data (2) Timber Mart-South-North Carolina 1991 – 2016 (3) Source: Enviva 15 $ / MT Port Costs Stable Delivered Cost of Fiber (2) North Carolina Pine Pulpwood 1991 - 2016 CAGR = 1.9% (2) North Carolina Hardwood Pulpwood 1991 - 2016 CAGR = 2.2% (2) Cost Advantage of Vertically Integrated Terminal (3) Operating Leverage of Northampton 7 mi. Robust Resource Availability Integrated Low-Cost Logistics
Barge-to-Ship Loading at Enviva’s Operations in Mobile, AL Long-Term Off-take Agreements
Take-or-Pay Contract Provision Examples indexed diesel pricing adjustment Note: Represents examples of various pricing protection provisions within our portfolio of contracts; no single contract in our portfolio contains every pricing protection provision listed above 17 Off-take contracts are predominantly denominated in U.S. Dollars and include contractual provisions that protect Enviva from change in law risk Shipping Diesel Stumpage Base Price Typical Contract Provisions Margin Protection (e.g., pass-through provisions or escalators) to protect against changes in: Cost of Fiber Indexed stumpage pricing matches underlying raw material commodity cost to regional indices Operations & Maintenance Costs Protects against changes of plant-level cost position through an inflator Logistics To Plant / To Port Mitigates fuel exposure through EIA Shipping / Bunker Fuel Fixed, back-to-back shipping component with bunker fuel pass-throughs to customer General Inflation Protects against erosion of underlying cost position through an inflator applied against base price
Contracted Production Profile Partnership’s weighted average remaining term of off-take contracts is 9.7 years and contracted revenue backlog is $5.7 billion1 Contracted volumes in the graph above include only contracts of Enviva Partners, LP or its subsidiaries; does not include the Hancock JV’s contracts. (1)As of January 1, 2017 (2)Does not take into account opportunities the Partnership expects to have to increase production capacity 18 Organic increases in production capacity within our portfolio create additional sales opportunities 3,500 3,000 2,500 2,000 1,500 1,000 500 - 20172018201920202021 EVA Production2Long-term Contracted Volumes1 Sales strategy is to fully contract our production capacity under long-term agreements
Contract and Market Update - Europe • In the UK, support for the reduction of carbon emissions and renewable energy continues after the Brexit vote. In July, the U.K. announced its 5th carbon budget with emission reduction requirements for 2030, after previously announcing plans to shut down all coal-fired power plants by 2025. In October, parliament agreed to extend the government’s powers to award new contract for difference (CfD)2 incentives for new low-carbon energy projects out to 2026 from the original end date of 2020 • The Macquarie MGT Teesside project in the UK achieved financial close. Our sponsor is the sole supplier of the approximately 1 million MTPY of imported biomass required by the plant, and the Partnership has contracted with our sponsor to supply 470,000 MTPY of these volumes, commencing in 2019 and continuing through 2034 • Drax received EU state-aid approval of the CfD for its third 660 megawatt (“MW”) biomass unit, anticipated to require more than 2 million MTPY • DONG Energy began burning wood pellets instead of coal at its 350 MW Studstrup unit 3 CHP plant and is currently testing wood pellets at its 215 MW Avedore unit 1 CHP plant. Dong Energy has stated half of the power and heat production at its Danish power stations must be based on biomass in 2020. The Partnership has a ten-year, 420,000 MTPY off-take contract with an affiliate of DONG Energy • In the Netherlands, the second and final round of applications for the 2016 renewable incentive program commenced in September with 5.0 billion euros in funding available. The budget for the 2016 second round was increased from 4.0 billion euros after the first round, which awarded several biomass projects a total of 2.5 billion euros in subsidies, was oversubscribed. Several utility-scale projects, including projects from RWE, Engie and Uniper, received 2016 awards. In addition, the Minister of Economic Affairs has announced that it will increase the program budget from 9.0 billion euros in 2016 to 12.0 billion euros in 2017 ¹ Hawkins Wright: The Outlook for Wood Pellets – Demand, Supply, Costs and Prices; Third quarter 2016 ² CfD – Contract for Difference is a legally binding contract with the UK government that supports biomass conversions in the UK 19 European industrial wood pellet demand expected to grow to 22 million tons by 2020, a 14% annual growth rate1
Contract and Market Update – Asia and Rest of World • In Japan, nearly 3.2 gigawatts (“GWs”) of biomass-fired capacity, implying demand of more than 10 million MTPY of biomass, have been approved through the feed-in tariff (FiT) program, of which approximately 500 MWs are commissioned. The Japanese government has set a target of 6.0 – 7.5 GWs of biomass-fired capacity by 20302 • South Korean demand is expected to grow to 2.7 million MTPY in 20201 as increases in the Renewable Portfolio Standard come into effect and several power generators consider new-build and full unit conversions to biomass • The Partnership signed an agreement to supply a minimum of 160,000 metric tons over three years to Albioma’s 36.5 megawatt, biomass-fueled combined heat and power facility in Martinique, subject to the facility achieving full operation • Albioma’s model is replicable in island nations around the world, highlighting the economic benefits of coupling locally-sourced biomass with imported wood pellets to displace higher-cost fossil fuels with a compelling environmental solution ¹ Hawkins Wright: The Outlook for Wood Pellets – Demand, Supply, Costs and Prices; Third quarter 2016 2 Bloomberg New Energy Finance: Japan Biomass Market Update; June 30, 2016 20 Asian industrial wood pellet demand expected to grow to more than 5 million tons by 2020, a 24% annual growth rate1
Enviva’s Port of Chesapeake terminal Substantial Growth Opportunities
Multiple Growth Drivers • • • Organic: Expect continued margin expansion and 1% - 2% annual productivity increase in existing production fleet Drop-downs: Port of Wilmington terminal is operational and expect to have an opportunity to acquire in 2017; Hamlet plant in detailed design Sponsor-Led Development: Significant opportunities to develop facilities to serve growing European and Asian demand Wood Processing Pellet Plants Hamlet, NC Laurens, SC Export Terminals Port of Wilmington, NC Childersburg, AL Shipping Abbeville, AL Lucedale, MS Import Terminals Port of St. Joe, FL Port of Jacksonville, FL Port of Pascagoula, MS Power Plants (1) Under Control assets are shown at estimated capacities and approximate locations. Sites Under Assessment assets are shown at approximate locations. 22 In OperationIn Detailed Design Under ControlUnder Assessment 2 - 3 million tons of additional export capacity to serve growing European and Asian markets Potential Industry Consolidation •Robust asset base across supply chain •Enviva has a proven track record of acquisitions •Complements existing development activity and enables entry to new geographies and markets M&A and Partnership Opportunities Across Value Chain Sponsor’s Development Pipeline (1)
Growth Supported by Committed Investors Invested • Principal owner of our Sponsor Enviva Holdings, LP “Our Sponsor” Enviva Partners, LP NYSE: EVA capital with access for long-term and Sponsor Assets Development Finance, Construction, and Commissioning 23 Operations Attractive cost of to capital markets funding ~4-year ROFO on JV Joint Venture •Separate entity that finances, develops, constructs, and commissions projects from Sponsor pipeline •Currently owns the operational deep-water marine terminal in Wilmington, NC and is developing and evaluating other wood pellet production plants •Enviva Holdings, LP can compel the JV to sell assets to EVA if certain investment returns are achieved •Capital can be recycled for future growth Strong Development Engine & Customer Contract Pipeline • John Hancock is the US unit of ManuLife Financial and one of the world’s largest timberland investment managers • $11.2 billion and 6.1 million acres of timberlands under management $550 Million • $34 billion energy/power private investment firm to Date
Sponsor Development Activities • “Build and Copy” replica of Enviva Port of Chesapeake terminal Fully operational • – ~1.0 million MTPY throughput contracted with Sampson and 3rd party volumes At least 2.5 million MTPY total capacity – • • First shipment loaded in December 2016 Approximately $7 million estimated run-rate incremental Adjusted EBITDA annually, increasing to approximately $13 million annually once Hamlet plant is fully operational1 Enviva Port of Wilmington (NC) terminal • • • “Build and Copy” replica of our Sampson plant Fully ramped production capacity of 600,000 MTPY Located in a robust fiber basket, with almost 400 million tons2 of standing wood inventory and an expected excess of wood fiber growth over uses of nearly 6 million tons annually2 after accounting for the plant’s demand Production will support our Sponsor’s off-take contract to supply the Macquarie MGT Teesside project in the UK Completing the detailed design work for the permitted plant site in Hamlet, North Carolina • • (1)For an explanation of why we are unable to reconcile these measures to the most directly comparable GAAP financial measures, plea se see slide 42 (2)Biomass Resource Study for Wood Pellet Plants in Hamlet, NC and Sampson County, NC; prepared by Forest2Market, Inc. 24 Enviva Pellets Hamlet (NC) Enviva Port of Wilmington (NC)
Adjacent Markets Experiencing Rapid Demand Growth large, rapidly growing market Industrial Pellet Forecasted Demand(1) Heating Pellet Forecasted Demand(1) 30,000 30,000 25,000 25,000 20,000 20,000 15,000 15,000 10,000 10,000 5,000 5,000 - 0 20142015 2016 2017 2018 2019 2020 2014 2015 2016 Asia 2017 2018 2019 2020 Europe Asia North America Europe North America Other (1)Hawkins Wright: The Outlook for Wood Pellets – Demand, Supply, Costs and Prices; Third quarter 2016. North America industrial pellet demand was 40k tons in 2014 and 100k tons in 2015; forecasted to be 100k tons in each of 2016 -2020 25 Metric Tons (000's) Metric Tons (000's) Wood pellets are largely fungible across industrial and heating markets … but increasingly shipping to another Enviva primarily serves industrial market…
Breaking the Fiber Logistics Barrier Unlocks North American Basis Differential Wood Chip Price (US$/Dry Ton) Sweden $130 Latvia1 $130 $131 Germany Japan $120 Southern US $63 Australia2 $138 Source: RISI World Timber Price Quarterly – July 2016 for first quarter 2016 1. 2. Latvia price is CIF Sweden Australia price is as of second quarter of 2015 26 Pelletizing Fiber Breaks Logistics Barrier and Enables Worldwide Delivery Annual Global Trade in Wood Products is Valued at over $250 billion
Market Size Growing Due to Application Diversity • Although the supply chain has been enabled by coal displacement and renewable heating applications, global availability of lost-cost fiber creates new markets Increasingly, customers are seeking to replace fossil fuel-based hydrocarbons with bio-based hydrocarbons • Market Size Time 27 $/ton Increases Chemical / Polymer Cellulosic Manufactured Wood Products Heating Applications & CHP Coal Displacement & Power Generation
Night Shift at Enviva Pellets Northampton Financial Highlights
Financial Results (1) Enviva, LP and subsidiaries (2) Common and subordinated unit. For Q2 2015, the declared distribution was $0.263 per unit, representing the prorated amount of the Partnership’s minimum quarterly distribution of $0.4125 per unit based on the number of days from the Partnership's initial public offering through the end of the second quarter of 2015 See slides 39 and 40 for Adjusted EBITDA, Distributable Cash Flow and Adjusted Gross Margin per Ton reconciliations. As discussed in Note 1, Business and Basis of Presentation, to our Annual Report on Form 10-K (the “10-K”), the consolidated financial statements for the periods prior to the Reorganization and the Southampton Drop-Down (each as defined in the 10-K) have been retroactively recast. This quarterly information presented above has also been recast accordingly. 29 2015 2016 In millions except per ton data Q11 Recast Q2 Recast Q3 Recast Q4 Q1 Q2 Q3 Net Revenue $114.3 $109.7 $116.6 $116.8 $107.3 $119.7 $109.8 Cost of Goods Sold $102.7 $94.4 $100.0 $98.7 $91.5 $100.1 $86.9 Gross Margin $11.7 $15.3 $16.6 $18.1 $15.8 $19.6 $22.9 Adjusted Gross Margin per Metric Ton $34.16 $41.94 $40.12 $39.37 $40.42 $43.11 $54.97 Net Income $2.5 $2.9 $8.8 $9.0 $7.5 $12.0 $13.0 Adjusted EBITDA $16.9 $19.1 $19.8 $21.6 $18.5 $23.5 $25.5 Distributable Cash Flow $13.9 $15.3 $15.5 $18.0 $14.8 $19.5 $20.9 Distribution per Unit2 - $0.4125 $0.44 $0.46 $0.51 $0.525 $0.53
Outlook & Guidance (1) Prior to any distributions paid to our general partner (2) Common and subordinated unit Guidance was provided on and as of November 3, 2016 See slide 41 for Adjusted EBITDA and Distributable Cash Flow reconciliations 30 2017 guidance above includes the impact of the Sampson drop-down, but does not include the impact of any other potential acquisitions or drop-downs In millions except per unit figures 2016 2017 Net Income $34.0 - $36.0 $31.0 - $35.0 Adjusted EBITDA $86.0 - $88.0 $110.0 - $114.0 Maintenance Capex $4.0 $5.0 Interest Expense $16.0 $29.0 Distributable Cash Flow1 $66.0 - $68.0 $76.0 - $80.0 Distribution per Unit2 of at least $2.10 $2.35
Tool and Die Work at Enviva’s Production Plant in Ahoskie, NC Experienced Team
High Caliber Leadership BP Williams John Bumgarner Director (Independent) John Keppler Chairman & CEO Bill Reilly Director (Independent) Steve Reeves EVP & CFO Gary Whitlock Director (Independent) EPA Exxon Thomas Meth EVP of Sales & Marketing Janet Wong Director (Independent) Buckeye Black & Decker Bill Schmidt EVP & General Counsel Ralph Alexander Director Robin Duggan Director Royal Smith EVP of Operations CenterPoint KPMG Michael Hoffman Director Jim Geraghty VP & Controller Chris Hunt Director Ray Kaszuba VP & Treasurer GM Plum Creek Carl Williams Director 32 Directors Management Management and Board with Significant Industry Experience
Enviva: A Compelling Story Compelling Industry Fundamentals Experienced Management Team Advantaged Assets Substantial Growth Opportunities Long-Term Off-take Contracts 33
Financial Information & Reg G Reconciliations
2015 and 2014 Financial Information ENVIVA PARTNERS, LP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per unit amounts) 35 Year Ended December 31, 2015 2014 (Predecessor) Product sales $450,980 $286,641 Other revenue 6,394 3,495 Net revenue 457,374 290,136 Cost of goods sold, excluding depreciation and amortization 365,061 251,058 Depreciation and amortization 30,692 18,971 Total cost of goods sold 395,753 270,029 Gross margin 61,621 20,107 General and administrative expenses 18,360 10,792 Loss on disposal of assets 2,081 340 Income from operations 41,180 8,975 Other income (expense): Interest expense (10,551) (8,724) Related party interest expense (1,154) — Early retirement of debt obligation (4,699) (73) Other income 979 22 Total other expense, net (15,425) (8,775) Income before tax expense 25,755 200 Income tax (benefit) expense 2,623 15 Net income 23,132 185 Less net loss attributable to noncontrolling partners’ interests 42 79 Net income attributable to Enviva Partners, LP $23,174 $ 264 Less: Predecessor loss to May 4, 2015 (prior to IPO) $(2,132) $— Less: Pre-acquisition income from April 10, 2015 to December 10, 2015 from operations of Enviva Pellets Southampton Drop-Down allocated to General Partner 6,264 — Enviva Partners, LP partners’ interest in net income from May 5, 2015 to December 31, 2015 $19,042 $— Net income per common unit: Basic $ 0.80 — Diluted $ 0.79 — Net income per subordinated unit: Basic $ 0.80 — Diluted $ 0.79 — Weighted average number of limited partner units outstanding: Common – basic 11,988 — Common – diluted 12,258 — Subordinated – basic and diluted 11,905 — Distribution declared per limited partner unit for respective periods $1.1630 —
2016 and 2015 Quarterly Financial Information ENVIVA PARTNERS, LP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per unit amounts) (Unaudited) As discussed in Note 1, Business and Basis of Presentation, to our Annual Report on Form 10-K (the “10-K”), the consolidated financial statements for the periods prior to the Reorganization and the Southampton Drop-Down (each as defined in the 10-K) have been retroactively recast. This quarterly information presented below has also been recast accordingly 36 Three Months Ended September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 (Recast) (Recast) (Recast) Product sales $102,557 $116,247 $103,445 $115,123 $115,081 $107,195 $113,581 Other revenue 7,217 3,462 3,807 1,690 1,507 2,464 733 Net revenue 109,774 119,709 107,252 116,813 116,588 109,659 114,314 Cost of goods sold, excluding depreciation and amortization 80,420 92,983 84,616 92,049 92,437 86,175 94,400 Depreciation and amortization 6,434 7,114 6,881 6,640 7,568 8,225 8,259 Total cost of goods sold 86,854 100,097 91,497 98,689 100,005 94,400 102,659 Gross margin 22,920 19,612 15,755 18,124 16,583 15,259 11,655 General and administrative expenses 5,056 4,237 5,016 4,913 5,082 4,613 3,752 Loss (gain) on disposal of assets 1,489 155 1 2,181 (128) 10 18 Income from operations 16,375 15,220 10,738 11,030 11,629 10,636 7,885 Other income (expense): Interest expense (3,314) (3,039) (3,181) (2,933) (2,910) (2,791) (1,917) Related party interest expense (51) (301) (209) (57) — (296) (801) Early retirement of debt obligation — — — — — (4,699) Other income 2 140 131 889 74 15 11 Total other expense, net (3,363) (3,200) (3,259) (2,101) (2,836) (7,771) (2,707) Income before income tax (benefit) expense 13,012 12,020 7,479 8,929 8,793 2,865 5,178 Income tax (benefit) expense — — — (34) — — 2,667 Net income 13,012 12,020 7,479 8,963 8,793 2,865 2,511 Less net loss attributable to noncontrolling partners’ interests 21 33 15 12 14 8 8 Net income attributable to Enviva Partners, LP $13,033 $12,053 $7,494 $8,975 $8,807 $2,873 $2,519 Less: Predecessor (income) loss to May 4, 2015 (prior to IPO) $— $— $— $— $— $(4,651) $2,519 Less: Pre-acquisition income from April 10, 2015 to December 10, 2015 from operations of Enviva Pellets Southampton Drop-Down allocated to General Partner $— $— $— $2,030 $2,395 $1,839 $— Enviva Partners, LP partners’ interest in net income from May 5, 2015 to December 31, 2015 $13,033 $12,053 $7,494 $6,945 $6,412 $5,685 $— Net income per common unit: Basic $ 0.51 $ 0.48 $ 0.30 $0.29 $0.27 $0.24 — Diluted $ 0.50 $ 0.47 $ 0.29 $0.29 $0.27 $0.24 — Net income per subordinated unit: Basic $0.51 $0.48 $0.30 $0.29 $0.27 $0.24 — Diluted $ 0.50 $ 0.47 $ 0.29 $0.29 $0.27 $0.24 — Weighted average number of limited partner units outstanding: Common – basic 12,919 12,862 12,852 12,122 11,906 11,905 — Common – diluted 13,480 13,445 13,337 12,418 12,193 12,159 — Subordinated – basic and diluted 11,905 11,905 11,905 11,905 11,905 11,905 —
Non-GAAP Financial Measures Non-GAAP Financial Measures We use adjusted gross margin per metric ton, adjusted EBITDA, and distributable cash flow to measure our financial performance. Adjusted Gross Margin per Metric Ton We define adjusted gross margin as gross margin excluding depreciation and amortization included in cost of goods sold. We believe adjusted gross margin per metric ton is a meaningful measure because it compares our off-take pricing to our operating costs for a view of profitability and performance on a per metric ton basis. Adjusted gross margin per metric ton 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 production plants and the production and distribution of wood pellets. Adjusted EBITDA We define adjusted EBITDA as net income or loss excluding depreciation and amortization, interest expense, income tax expense, early retirement of debt obligations, non-cash unit compensation expense, asset impairments and disposals, and certain other items of income or loss that we characterize as unrepresentative of our ongoing operations. 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 and interest expense net of amortization of debt issuance costs and original issue discount. We use distributable cash flow as a performance metric to compare cash generating performance of the Partnership 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. We do not rely on distributable cash flow as a liquidity measure. Adjusted gross margin per metric ton, adjusted EBITDA, and distributable cash flow are not financial measures presented in accordance with accounting principles generally accepted in the United States (“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 gross margin per metric ton, adjusted EBITDA, or distributable cash flow in isolation or as substitutes for analysis of our results as reported under GAAP. Our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility. 37
Non-GAAP Financial Measures Reconciliation The following table provides a reconciliation of distributable cash flow and adjusted EBITDA to net income: 38 Year Ended December 31, 2015 2014 (Predecessor) (in thousands) Reconciliation of distributable cash flow and adjusted EBITDA to net income: Net income $23,132 $185 Add: Depreciation and amortization 30,738 19,009 Interest expense 11,705 8,724 Early retirement of debt obligation 4,699 73 Purchase accounting adjustment to inventory 697 — Non-cash unit compensation expense 704 2 Income tax (benefit) expense 2,623 15 Asset impairments and disposals 2,081 340 Acquisition transaction expenses 893 — Adjusted EBITDA $77,272 $28,348 Less: Interest expense net of amortization of debt issuance costs and original issue discount 10,099 6,703 Maintenance capital expenditures 4,359 515 Distributable cash flow $62,814 $21,130
Non-GAAP Financial Measures Reconciliation (Cont.) The following table provides a reconciliation of distributable cash flow and adjusted EBITDA to net income: As discussed in Note 1, Business and Basis of Presentation, to our Annual Report on Form 10-K (the “10-K”), the consolidated financial statements for the periods prior to the Reorganization and the Southampton Drop-Down (each as defined in the 10-K) have been retroactively recast. This quarterly information presented below has also been recast accordingly 39 Three Months Ended September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 (Recast) (Recast) (Recast) (in thousands) Reconciliation of distributable cash flow and adjusted EBITDA to net income: Net income $13,012 $12,020 $7,479 $8,963 $8,793 $2,865 $2,511 Add: Depreciation and amortization 6,439 7,120 6,893 6,652 7,579 8,237 8,270 Interest expense 3,365 3,340 3,390 2,990 2,910 3,087 2,718 Early retirement of debt obligation — — — — — 4,699 — Purchase accounting adjustment to inventory — — — — — — 697 Non-cash unit compensation expense 1,162 819 681 341 180 183 — Income tax (benefit) expense — — — (34) — — 2,667 Asset impairments and disposals 1,489 155 1 2,181 (127) 9 18 Acquisition transaction expenses 2 6 53 461 431 — — Adjusted EBITDA $25,469 $23,460 $18,497 $21,554 $19,766 $19,080 $16,881 Less: Interest expense net of amortization of debt issuance costs and original issue discount 2,919 2,894 2,944 2,614 2,555 2,717 2,213 Maintenance capital expenditures 1,375 832 551 893 1,724 975 725 Distributable cash flow attributable to Enviva Partners, LP $21,175 $19,734 $15,002 $18,047 $15,487 $15,388 $13,943 Less: Distributable cash flow attributable to incentive distribution rights 302 257 156 — — — — Distributable cash flow attributable to Enviva Partners, LP limited partners $20,873 $19,477 $14,846 $18,047 $15,487 $15,388 $13,943
Non-GAAP Financial Measures Reconciliation (Cont.) The following table provides a reconciliation of adjusted gross margin per metric ton: As discussed in Note 1, Business and Basis of Presentation, to our Annual Report on Form 10-K (the “10-K”), the consolidated financial statements for the periods prior to the Reorganization and the Southampton Drop-Down (each as defined in the 10-K) have been retroactively recast. This quarterly information presented below has also been recast accordingly 40 Three Months Ended September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 (Recast) (Recast) (Recast) (in thousands, except per metric ton) Reconciliation of gross margin to adjusted gross margin per metric ton: Metric tons sold 534 620 560 629 602 560 583 Gross Margin $22,920 $19,612 $15,755 $18,124 $16,583 $15,259 $11,655 Depreciation and amortization 6,434 7,114 6,881 6,640 7,568 8,225 8,259 Adjusted gross margin $29,354 $26,726 $22,636 $24,764 $24,151 $23,484 $19,914 Adjusted gross margin per metric ton $54.97 $43.11 $40.42 $39.37 $40.12 $41.94 $34.16
Non-GAAP Financial Measures Reconciliation (Cont.) The following table provides a reconciliation of the estimated range of distributable cash flow and adjusted EBITDA to the estimated range of net income. Guidance was provided on and as of November 3, 2016: (1) Prior to any distributions paid to our general partner 41 Twelve Months Ending December 31, 2016 Twelve Months Ending December 31, 2017 Estimated net income (loss) $34.0 – 36.0 $31.0 – 35.0 Add: Depreciation and amortization 27.1 34.5 Interest expense 18.0 31.3 Non-cash unit compensation expense 4.3 6.6 Asset impairments and disposals 2.1 4.0 Acquisition transaction expenses 0.5 - Early retirement of debt obligations - 2.6 Estimated adjusted EBITDA $86.0 – 88.0 $110.0 – 114.0 Less: Interest expense net of amortization of debt issuance costs and original issue discount 16.0 29.0 Maintenance capital expenditures 4.0 5.0 Estimated distributable cash flow1 $66.0 – 68.0 $76.0 – 80.0
Non-GAAP Financial Measures Reconciliation (Cont.) Our sponsor’s estimates of incremental adjusted EBITDA for the Wilmington terminal are based on numerous assumptions that are subject to significant risks and uncertainties. The assumptions underlying our sponsor’s estimates of incremental adjusted EBITDA generated by certain of its assets are inherently uncertain and subject to significant business, economic, financial, regulatory, and competitive risks and uncertainties that could cause actual results and amounts to differ materially from those estimates. For more information about such significant risks and uncertainties, please see the risk factors discussed or referenced in our filings with the Securities and Exchange Commission (the “SEC”), including the Annual Report on Form 10-K and the Quarterly Reports on Form 10-Q most recently filed with the SEC. A reconciliation of estimated incremental adjusted EBITDA to GAAP net income is not provided because forward-looking GAAP net income generated by the Wilmington terminal is not accessible and reconciling information is not available without unreasonable effort. The amount of interest expense with respect to the Wilmington terminal is not accessible or estimable at this time. The amount of actual interest expense incurred could be significant, such that the actual amount of net income generated by the Wilmington terminal could vary substantially from the amount of estimated incremental adjusted EBITDA. 42
env1va Contact: Ray Kaszuba Vice President and Treasurer +1240-482-3856 ir@envivapartners.com