Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the Enviva Second Quarter 2023 Earnings Conference Call. [Operator Instructions].

Now, I'd like to turn the call over to Ms. Kate Walsh, our Vice President of Investor Relations. Please go ahead.

Kate Walsh

you. Thank and second everyone, earnings of to call. conference welcome morning, quarter Enviva's XXXX Good interest support in thank your appreciate We and your today. you of participation for and Enviva,

Chief have On call, Chief Financial Executive Thomas Executive and Officer; Meth, Vice this President, and we President, morning's Officer. Even, Shai and

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

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

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

financial and measures earnings reports, on release, recent of envivabiomass.com. most can we website use investor contain be non-GAAP SEC Our at which our presentation, reconciliations found

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

Thomas Meth

you and everyone, us. thank morning, Good joining for

last made our few and good the over yesterday, in filed release we've press saw you As months. progress XX-Q

the of very focused start and year, disappointing embarked at to earnings of drive coming business You a will call May difficult and increase in levels that remember plans. our to out production on a current we costs the out journey last our from

to possible. start took to profitability made I to needed number regaining of changes return over have our since the have levels the a team demonstrated of and May, we important ground leadership personally of In operations we

changes recently on company We savings the to with executed a turn As expected benefit operating small cost overhead in uplift of which and back these a materialize reduce is year our of for see this the is to of million, track some annual position SG&A size. our half the and our $XX part get should needed costs corporate to that our to by XXXX. designed changes to of cost in expected restructuring around, back results we full

to compared cost XXXX by our good June cost produce metric compared made per cost, ton the with call or reduced DAP as we down cost first as transport also progress our year. quarter wood and We metric ton to our for reducing was per $X to at as second by We've importantly, pellets quarter our for delivered DAP more the to it, first ports. And XXXX. this quarter $X of port

what Our year. continuing or the we good sign, early innings be seen to are third achieved June of Results DAP position they lowest with have cost so in appear to June the we a and in for improve. in a quarter, far seeing was the over

to a encouraged closely. to and path and progress by lot million, monitoring improve still are managing and there annual with operating but $XXX our is hard do a making, very of on are position I'm we're left we We the work

for we year. and reset quarter, of quarterly provided for Last guidance XXXX remainder the expectations the expectations

million. with $XX EBITDA target in million a second million of adjusted second with range adjusted And of quarter, we to set EBITDA. $XX of line $XX results range yesterday, we the For reported this quarter

repairs strides with our the cost and as fiber well discipline as delivered our second the reducing we of around During quarter, improving made maintenance. cost

contract unnecessary at labor When We performance. also the Waycross, fairly acquired Waycross our successfully owning planned improvements weighing completed in we running a plan somewhat back to Georgia that within all on by large planned plant. XXXX, planned past Those outage masked financial was June. we worked facility. of were out the by three undertake was we that quarter, this and of And Waycross or this up two outage years and years

is of One It's equipment the largest for or currently of key new is in by at important our fleet our the our plant some best maintenance volumes and dampened performers XX,XXX since projects from the was we other and control to quarter run of during years tons one the perspective, rate produced should outage that of making to emissions the note muted the production metric plants. cost XX typical about so. last the both at were replace Waycross the cost improvements next that and production equipment and Waycross the and

number the operational we the June, lower generating of in now. quarter operating changes take In of challenges Through a to Prior the that last started South XX% a around operating plant we Virginia, with the two Greenwood, hold Hampton running capacity June, dryers, plans our quarters. for have South been cost. about South only unprofitably where for Carolina facilities. talked having at to with plant's we're South the change way the and to much We're decided Hampton one of Hampton,

profile as gives to running Ahoskie best similar as for manner path we're well to lowest of plant the to the forward asset a issues in time profile, underlying plant. us the production this cost a fix our fleet. this very evaluate plants With one in This

at a small able Our since problems Greenwood We systemic than raised changes production to are plant the which less make island and rates facility. different have were bottlenecks, to few process Hampton. South

procurement in hardwood period two are procuring Greenwood, throughput because in the which also of availability increasingly These a improved position strategy relatively implementing We its of have a greater time. changes includes and area. more over at cost short fiber change the

during fourth As quarter XXXX. position path cost on target a a result, Greenwood and reach production its is to level

for achieve, our full this maintaining to and what expect quarterly As XXXX second we half to guidance fourth EBITDA are to quarter $XXX third adjusted million we're updating look of EBITDA. $XXX adjusted expectations of the we range we and our year million, and

stepping For of third to as to range EBITDA million range primarily result adjusted million two down $XX factors. quarter, $XX $XX of a million, previous of expectations our a million the from of to we're $XX

completed one the First, at XX% we increase decided do to positions lowest our to at expected Ahoskie, the production The extend the a plant maintenance in planned capacity expansion cost that for Carolina by we announced North of at which is fleet. to groundwork outage expansion to lay our Ahoskie, when approximately is Ahoskie. previously

back shifted of the we year, shipping our a those from half the [ph] quarter. October, couple of into associated as and ships schedule. pushed opted September revenue We margin and second, the late the third have fourth with And ships enter from quarter they early Lucedale we to of

materialize, expectations quarter, $XXX our the expect opportunities, million, commercial million up to million. are to to we for fourth EBITDA With with adjusted million expectations to for $XXX from $XXX we along updated the raising fourth quarter $XXX

and to a good The other reprice a have earnings in have successfully higher also such contracts third significant quarter fourth contracts, quarter, repriced deliver more number legacy on select in contract by contracts. as in we higher the that step-up expected legacy is prices, we percentage of we during lucrative the factors into our over negotiations of visibility quarter underpinned

by escalators our ton to our addition, that prices. fourth pricing dynamic be inflation to reflected of XXXX to costs. related And we're per the headline an of incremental will DAP is quarter, out in $XX working contract Another in all drive $XX

With the production in we increases steady path drive but from the primarily strong improvements small significant Hampton incremental tailwinds challenges back South will to that fleet from Greenwood process asset our of year. fourth seeing quarter. fleet are we're to the and determined recovery, Additionally, mitigated current supporting production a a value asset and across on half our benefit the corporate and cost offices, very

Shai it go turn that, our detail. in through With financials I'll more to to over

Shai Even

you, and morning, Thank good Thomas, everyone.

of $XXX.X quarter loss $XXX.X second compared was as quarter for million XXXX for the quarter the second second start with as net XXXX of second loss the the quarter of a quarter compared of second quarter generated million million of of million XXXX. results. for to Let's compared Adjusted to the $XX.X XXXX margin second of million for quarter XXXX. the the for second Net $XX.X as of XXXX. $XX.X revenue for net $XX.X million to was We gross

receive have The quarter second, payout more XXXX. simplification part we of year of that million the in decrease of year main in versus to given not year-over-year two given transaction second second of support the payments attributable planned, going which quarter our of our $X $XX.X year. terms compared had of second was to Japan expectation the million fact into October we we quarter is year, that last and And higher this this factors: did shipping we received the last last deliveries year in costs with the First,

margin availability $XX.XX million second the million plant support gross was generally cost year-over-year of XXXX includes is Epes, a our senior to under XXXX, ton compared million, XX, per EBITDA of Mississippi Thomas facility. in for $XXX.X second the secured for XXXX. Adjusted quarter as restricted credit payments on cash the second plant mentioned. This metric the was funding XXXX and quarter Enviva's differences and quarter of the Bond, $XX.XX hand, the for compares to and for to $XX decrease to second our which and XXXX, $XX.X costs. June including was Adjusted of quarter shipping attributable as Alabama million, cash revolving $XX.X portion liquidity of

tax a investment as tax are of X% part could of Bond, and total be for projects eligible the inflation Epes we of that value be can credit recently If advanced topic the incentives. each included applied awarded of credit from successful, up monetized project. to XX% energy for capital On the we cost to we reduction

down of guidance XX% a Given to lowered to ranges. flow and represents XXXX to million $XXX million, timing capital $XX Epes or the to $XXX million we million Bond, cash full-year the at total million, related expenditure our spending from the $XXX decrease midpoint which $XXX range of have of

out Epes of projects our pushed and are Payments compared estimates, does for cash prior and mid-XXXX related impact to not timing outflows mid-XXXX Epes, this our Bond. in-service our as but capital to planned of periods for dates of future deferral the Bond

expansions asset the and higher our Our improvements on a somewhat deferral productivity within certain timing existing by greenfield was fleet. spend of items spend offset of

are $XX previous from category projecting to of capital $XX at million. $XX expectation million We investment work projects, capital and increase the $XX the of to Ahoskie to million related plant. Part our of acceleration million small on this done now spend of being is up our between of

million to We spend to on during expect approximately $XX CapEx. XXXX continue maintenance

depending credit payroll unchanged. balance exit to be of as working but on the to this ratio continue remains conservatively how planned given in X get agreement Enviva's agreement. for target payroll X.X XXXX it may to credit will And sheet quarter timing We range XXXX. of X and managing temporary, times to times around Our to capital, year. long-term will leverage back our long-term we a activity commitment work times the fourth target we of is much

threshold a agreement X.XX As the times. is credit covenant reminder, our under

I that, With to would it to turn Thomas. back like now

Thomas Meth

Shai. you, Thank

reducing given past from increases outpaced over sales certainly our short-term years. Our our raising contracts has prices on constructive have our of been our that as suffering we increases couple some We've with having customers and quickly that conversations costs industry the as of whole price and legacy sales portfolio. price focus been across can also has been durably cost regarding improving productivity of

continues in strong. Poland emerging because expect us. historically sales and we see biomass short for per profile fossil a very shipments rates We long-term sold of creditworthy develop which and physical Poland. European part is has demand very this new highest in commodity growth on significant the announce for factors, fuels. a a our of into delivery customer be is that one new coal have dependent And those two globally been is an first that customers and opportunities capita I'm of consumption to with large Poland, to front market structurally very our to supply very to business happy Russian for on the encouraging is our conversation because we've

how energy In this continue nations. the directive the renewable Union net woody biomass, which its given expected October, to zero resource will European is finalize targets tailwinds to we of expect for the text is Europe, the provide EU by demand to important renewable member related to

short supply. structurally Our industry continues be to persistently

So, signing capacity contracted such built. our as new means contracts new new into contracts new expansions. thus, Poland get And production must capacity are jurisdictions, these large-scale, that underwriting fully

best our the off which As modeled is Cottondale, are a reminder, and Waycross plants. capacity performing our Lucedale, new

Currently, our is Epes, Alabama to progressing schedule budget mid-XXXX. and and operational be Epes well. expected and progress under construction plant by is on to continues on

moving construction Bond, we finalized with partnering year. plant, we firm, the Mississippi have are this will our an For which certainty, EPC and provide contract with and end to of forward an cost by help EPC expect

leverage cost Because legacy our Enviva's with growth of asset fleet, closely and profile, managing improving liquidity top operating progress as our current our we're effectively financial we monitoring and profitability drive and reducing better our priority is existing the making repricing targets, towards rates production contracts environment. reflect to we're

deferral To impacting six extent, opportunity and by any backed needing move time to in-service our commitments, date related XXXX. customer state This to reaching likelihood the fund build months our with into the from leverage we not the Bond near-term mid-XXXX timing we're in-service the plant remaining to in markets on enhancing liquidity access therefore, pace defer needs and reducing capital Bond. move potentially approximately Bond XX to have of without to would targets, the months and profile of the

And last on not quarter, the allocation, have topic I top our of two changed. outlined priorities, capital as

As of liquidity management effective our just mentioned, in remain leverage. prioritizing I steadfast we and

of prioritizing operating Secondly, costs our continue certainly and have These been our will our areas. current asset platform. the and productivity focus we're to improving be

To by progress priorities, Board repurchase repurchased the XXXX. Last capital be shares contemplate have allocation first date, opportunistically. does of we value quarter, two consider Directors current our we a not should program. and our of share the shareholders returning using able that for Once remainder plan repurchases we announced to necessary to authorized make on not this tool our we

of year, contributors to material significant EBITDA to the projected improved morning. we with achieved open line start expectations compared EBITDA our I'll production of are the the Before cost adjusted sales reductions, we are in XXXX. give first change and being what projecting To recap the half call a year full this primary we earnings for second in prices this and have of for a half quarter back as questions, adjusted reaffirming flow the quick off, discussed increase with for cash we increasing and the results. guidance year In in step

of past in The few we've the hold the June changes the first the we have made taking months third by as in and are we advances seen over achieved evidenced performance the part operating foremost not two on have finally, and with leverage quarter, a asset position and top priority. priorities close our cost capital allocation liquidity and changed. We're productivity, our second improving focused very

this lot over continue growth of of do the and the and to We what the and have are work us. a us quarters. to done exactly rebuild execute you to to fixes be of those on strength know what will coming needs ahead capitalize company months We see

questions. for call the open let's Now

Operator

[Operator Instructions].

Truist. First question Levy, Please Jordan will go from be ahead.

Jordan Levy

and Good provided. all, the all you morning, I commentary appreciate

guide. could I the just XQ Just talking XQ through subsequently, Maybe working the a bit to the and if initiatives we on. dig guess, that you're in

a of And how goes uptick about you XQ. factors quantify to big price reduction think that, to higher DAP the that $XX mentioned the few versus to? in the just then you help that Can reduction talked think, the into benefit you us I $XX that You in to expect are realize? cost what driving

Thomas Meth

a foremost, to seeing the going South but we're we that absolutely. state thanks to and And -- plant million question. first we follows, Good still That's right? our $X to the it's Obviously, plant. of drag, Jordan, expecting South to The forecast forward. was different year. in the where for expect for In buckets in we're We're -- very end be half morning. as of Hampton half breakeven are and included a it QX, profitability, that the that here spot Hampton the to that's second Yes, the we come for not second be expect back final the year. and of that

higher will And bucket. will to QX than certainly we certainly absorption. When South bucket, will be first, contract QX. in cost will bucket costs we What Hampton. lower equal big Repair management and have size labor We're That's over going see started in lower. right, QX start June so $X QX. drive fixed-cost for million maintenance, certainly in be another and continue for another

to see some much ships drive incremental pronounced contracts the cost through reduced expect half provide really will of We in uptick the It's margin price an incremental starting do year. that certainly see metric into that by the of to we certainly typically QX, to starting tons our QX incremental contracts. in than fixed in XXX,XXX our more to and QX. higher incremental but in make is second shipping absorption margin revenue -- we then And a

through If shift we in South still or go that to then a again, take not have to Hampton customer losing QX QX million coming to QX, -- significant drive about of QX cost talked we see QX. have is a and of we to $XX -- a amount. second are QX I'll the We management buckets little money. reminder, sales the to bit half is we in We're remaining Then another unpack higher volumes. a have incremental And -- an out will to going that continue more. will

we're small against Lucedale Cottondale. growth very in We and which growth both executing accretive have in our projects, are small some -- projects

two For pellets Amory adding at and example, service. we're and Lucedale back Ahoskie in

going contracts and have Then in a be significant is past uplift we're of half for to least flowing that's at QX certainly and going we of to second QX and will through. repriced -- the half we the That's for changed contracts project in step-up the have -- for that's QX. what that

price are pronounced higher were begin to QX. didn't to higher-priced they have generally in They and We most contracts we that have reprice. with,

annual opportunity about from particularly then general we've QX. in weighted. include QX. moving are back the to as that's -- have end higher escalators That of higher half the EBITDA our commercial as certainly XX% up some It's free nowhere to pronounced in QX. talked expected near seen pronounced of benefit -- have that materializes, If from volume we in comes to And an activity Although range. the some certainly can running fully through. you're prices It's we

Jordan Levy

I maybe very separate And that just helpful. a appreciate you. then all Got follow-up. detail,

profitability through on the bring talking the plants. up some of of to working initiatives some Just you're at

on the do this bring the sort portfolio of think portfolio consider sort about considering if that go of think about how how through that you a you thing, you Just down Curious optimizing how of you and plants you think about whole. some you selling and and as as would lower-performing assets that? new

Thomas Meth

profitable Well, look, We here. lot based two right? a progress, plant created by do and plant really we short a get let And every single actually to plan, that as to to incredible right? we've either is time so back on changes whole a of significant we've what one level, get not is made or time, to take back we've there me a but of very, -- very step ago, plant months these every a plants in has made profitability. very seen That how period potential bottoms-up of

-- and We required discipline. level a a very is accountability operational operating different don't small. level with there absolutely The and the can they are built do get way discipline of with this the cost different to of capital plants with

against create all have plants our in profitability XX will book. contract we of and service, plants So, underlying those

again They Lucedale I plant I we've the performing good It built. lowest really that ton. specifically modeled Those per and about want plants. last remind feel the after are think have cost you way Cottondale, Waycross. asked about building our to Epes. folks is we're best is our I Lucedale, Epes.

how have know good really top And that's we're automation plants. good to new position cost that three plant this. I a with clearly, highest executing do really consistent a We how will the those plants. of Epes for a on level particular And So sign cost-per-ton that, will basis. have three feel

Operator

Scotto, Elvira Capital. Please RBC from ahead. be will go question Next

Elvira Scotto

And on Can the higher? do you what your contracts good you everyone. progress goal you talk you of legacy mean, Like, I repriced? do more these here morning, where repricing bit can what this have percent you Specifically, is a reprice thanks. think Hi, think can little contracts? go? about XXX%? these

Thomas Meth

to Elvira, for good but value those of question. right? magnitude at margin few not in We're to $XX in incremental targeting of XXX%, we the created but Look, per contracts. to that's through, will relationships creation $XX would that a have different around profitability order these I in ton also contracts. example, is for morning. profitability. types that like $XX $XX increased that Thank of We or our love of $XX that can And we you QX repriced different these reprice for to pricing, the come announced there drive just have customer opportunities are contracts. have expectation,

multiple negotiating good is making are We we're progress. with This -- counterparties.

some flowing months, look of that's of to that we when a in of basis. couple rest go-forward are to next then we'll And expect able exercise ready what we for We going that in include to the complete over like that as year. the through on -- for sustainable start actually XXXX guidance the also be

Elvira Scotto

And Thank the guidance you some of is help just year, me for of potential the you. then percent of the rest that this on spot understand referenced? based business what Okay. that --

Thomas Meth

that the that, QX. we're way for higher certainly commercial that of the this activity, we're And some the it think end to of get is successful business. seeing of happens of magnitude at that if the in to part part range. order us that of if I happen the helps as That's in it Look, to look will the

Elvira Scotto

are specific helpful. have you or Great. make do for? the when And you decision you're you you think it And could the opportunity can no? looking the Like would defer whether decision That's milestones on like could When a defer Bond. you to that? you mentioned defer that Okay. make -- then can what timeline that -- you

Thomas Meth

absolutely. Yes,

But plan Bond months be We're if to absolutely negotiating against -- So, by to or the we -- plant. will that keeping contracts as we six that optionality decision I've in of point on that that current the opportunity so XX we're track. us to year. and plant have a full execute made we're some the EPC choose months, next part delay earlier we by at said, give

Elvira Scotto

Thank great. Okay, you.

Thomas Meth

thank for Elvira. question your you, Absolutely,

Operator

The ahead. go next Please Graham question Burns will of Raymond be from James.

Graham Burns

morning. to volume taking if you're guess that wondering I the to for able one, XQ Hi, you, disclose and question. for XQ good numbers? expectations my was Thank correspond a first the I guidance

Thomas Meth

we the So, back QX from and to bit XX% XX% a from drivers a again, more track. that, as QX. about expect to for And increase then QX, QX little than I've Waycross on said, are

period seeing are That's I in We a continue. in and reliability really May plants have up the will good really step And June we we on a over will April, in QX, the of drive think that made -- some progress the Ahoskie, very back fourth time. percent of quarter. XX-plus the projects for short that Amory incremental track, growth that have of

Graham Burns

Those Understood. kind for would And spot you number top. that just sales. clarify, gave on to be that excluding especially just XQ is of number that number, any growth --

Thomas Meth

then level So, range we've activity, there. higher there's can higher were prices to of purchase, of to want to in of increase as that get volumes happens, third-party that that the certainly we expect, give And do what if out. I the said right, it commercial point us if a certainly some market we end is a the

Graham Burns

to great follow-up, my for then And into Perfect. first sales the Poland. see Okay.

Just provide any additional contract additional any color around to length? curious if able details. you're pricing Just

Thomas Meth

because that us there good higher two pricing contract really And We've and in this a it also XX,XXX -- is previously historically, about from XX,XXX substantially in seen that that's ships contract allows that we've think contracts sailing We're see we're for about shipment. for a Polish shipments opportunity. the certainly happy environment consistent can test you Polish -- When new tonnes. to and a said been tonnes, step. next new that lot really now materialize it's investing new that that to test you I'm of benefit while. -- total that infer something very is we've seeing the a to about I'm with of Poland, market a is absolutely. quite Yes,

we'll for that And getting are right? offtakes provide geography which that in understand contracting in for volumes with of test if next means with here that we opportunity quickly pick opportunities us. You're successful, agreements new activity get volumes, we project. the that the per Poland couple the longer-term opportunity will of that creditworthy offtake that counterparties kinds million-ton these to in to very And months, -- see larger a up, is to significant

Graham Burns

Great.

Some progress. much. type of Thank you very

Thomas Meth

you. Thank

Operator

Thank you.

Our question go Strouse ahead. JPMorgan. next from be of will Mark Please

Unidentified Analyst

It's Deron for Mark. question. my Thank you taking for

in much feel contracting just $XX for the to pricing $XX from good to when end want of takes the $XX is have of pricing to How fiber look year and some you cost focus the do like between impact have the $XX visibility of reduction the the you right First, I on then coming recognized kind into puts P&L, fiber at in it's and of I reductions? your want the And the fiber given rest for But year to the the pretty there? lag just that you here. that costs. now of in the DAP

Thomas Meth

from hear and the great for thank Drew, question. you, you to Yes.

previously with then you revenues. all the So, lower-cost we turn about the and the way to I'll into months the to right? we've the takes across two think saw. when of discussed, end start QX as scale purchases reduction of cost -- In it about for or a the And take reduction it XX% actually the month QX, was year, that fiber

If June, come in shows that seeing that And saw what you really we April May in talk so across now me have we're in right? progress. the scale

the improvement, through. some from really more expect then will come fiber buckets. we'll And to continue actually that June, in see We flowed to And most $XX certainly $XX that. other but of

volume We're spend, in will we're to And that drive increases I R&M that -- on leads still $XX we'll is demonstrated and we off business this plants the to in or improved define probably started control. cost can absorption. The of really and fixed $XX tightly. labor, is cost will going end other potential fast see $XX about June, the really It year That these managing we've increased would at this of say, take fixed very cost $X hold whether then how And out. basis, $XX fixed is contract potential $XX the buckets, get $X we've reliable be management. $XX. to very, to of that and out a what coming of half up to to

I example, for it a a down, had for when would day, bad reliable days. that previously, less plant X.X say was

This very we're we're very, a the means we day increase cost seeing and that confidence absorption to volume through management improvements losing we've path fixed gives couple the in right bad in cost different seen. a on come of Now already day. addition June, is to a us and that some hundred in of are tonnes that what

Unidentified Analyst

very fair make That's think is of the kind circle year, I the could to Bond lastly there And Are If back on how decision that you just there we rest we going any in assume track are throughout not going of to associated rules any profitability? about that this things of the it quickly. see Understood. for Is to other might weigh there? are decision there on want then helpful. with be just that on timing? guide that the to be thumb delay guys on from here? are that. costs able can you're to that's from Or going into upon

Thomas Meth

I the will second book. our our don't and any cash from expect there. for understand will wood our to optionality 'XX factor. that to continue me input what we also if think have input sure make the that contract against a with when like, And flow long-term delay, the we for a for material for have numbers, 'XX have hit cost majority and like driven manufacturing and business look what is, in of profitability into generate the vast cost existing really we be numbers position our will will -- so, part. good from pellet operations I second factor that half 'XX. look key going Look, I is will to now we key our say the year, of We hit we that's the start we

that year factor sustainable looking to sustainable that we were is the cash where variability key where that that believe market course, the our going certainly, timing. a capital we that volatility forward. to I need very we exposed good a if activity, will the If conviction, the capital access in we forward. exposed us actually input credibility are, supplement back because cost those will years be will early position to existing create and that flows think, And that decision. of at we're And define to were And can then, ago. are, make next then case, to will see from in I with going improvements give a two markets, a position not we way that's that cost or

Unidentified Analyst

Understood. a much appreciate on this lot. Thank Thomas.

Thomas Meth

Thank you Drew. very much.

Operator

The Instructions]. will Please Citi. Levine in. Ryan [Operator go next question with be from

Ryan Levine

to resources the are Hey, that expansion? the timeline are be going being drove there initiatives Ahoskie? repurposed are dedicated any that everybody. What cost to this reduction the announce of for And to expansion

Thomas Meth

right to capacity Right. for project cost recently we're equipment, expansion. will Look, do Great to size I Ahoskie. And that the question. prepares installing was The approximately $X time decided [ph] it upcoming not which we million. mean

at the basis. On good this right? couple us but this really weeks to from shut was for for down improving long-term about long-term optionality have to to is hand, looked thought never plant this has for one a -- We a to business the of basis, time, think a a on -- be we

They initiatives. out certainly reduced that if not that And there on we're and that profitability certainly cannibalize reduction the all this not are in resources and complete getting cost and the that's our at. drive distinct the do business, execution quite headcount project each us maximize other are Ahoskie we puts to required an Despite those cost equipment substantially, to areas and long-term includes we step using from change. preparing of a business us and that perspective, the separate that a for fact you're the right what Ahoskie. From installing expansion for path necessary

Ryan Levine

Okay. a that. And on then follow-up

trends there some turnover will the quarter? impacting terms disclosed fourth be quarter. -- any will you you is seeing that broadly, that have And the of continue costs weeks? the more severance In into Is that of in going been of how third to that recent be

Thomas Meth

for you thank Ryan, that question.

associated that So, in for the QX. we with and outlined with reduction QX we million be cost completed end expect the have $X to that this

rolling the on Our and to positive sleeves had has focusing really that see. impact really the the the operations focused is on the management of a And team. matter the go go-get to your -- plants things the morale added up on attitude when I mean nice really, of you plants,

that down see And positive we months exclude we turnover force, continue. so before form, did I the in and obviously -- or a expect come reduction over months three the trend to and last two but in really

Ryan Levine

question. thank you Great taking that for

Thomas Meth

Thank Ryan. Absolutely. you,

Operator

question next Thank in. from Scotto The go be a of Capital. Please will RBC follow-up Elvira you.

Elvira Scotto

then that? What question. think you you Hey, that, bonds muni use able you expect interest thank bonds? you you Can for rate can when with taking do to me financing finance to our -- for you about remind And would expect? the what be rate

Shai Even

So we from first, I proceeds exemption available the still that to the tax for us. Mississippi plant think like the Bond, do have

We haven't cash proceeds. we're end do the the the of that at quarter. part of have restricted the used that holding we And

Epes the of quarter, for cash have issuance million. potential market additional end We the capital was At to exam the plant. Bond plant tax project. for the and $XXX the Bond have the market for to do for that the back of coming about the bonds We of available

the come and our market. we've we like are trading. bonds think will However, conditions not back prudent to where be the market seen that to now And

as when a talking when flexibility decision we result, make to timing going have the Thomas a additional on bond. going the to in and of the decision funds fun Now make that as a we are spend we're mentioned, we're with investment about, on

the Thomas in back timing the and at plant for the going markets about for how at executing decision for looking make bond -- our tranche -- then for coming and forecast potential XXXX, to already the tranche potentially tax-exempt operating capital for the see potential the we're tax-exempt the for timing additional we're market. a our or from So, plan, bonds cash mentioned about looking XXXX, of our using Bond of to activities to look flow what

Elvira Scotto

much Okay very great. you Thank that. for

Shai Even

Thank you, Elvira.

Operator

Thank you.

follow-up a Our next for question be Levy of Jordan will Truist.

Jordan Levy

Hey.

deferred don't you follow-up. get have quick transactions deferred we I XQ good growth Is appreciate to any transactions it say didn't any margin of into anticipate you see. -- as a these more this Just and additional to fair XQ? quarter, which is

Thomas Meth

margin not forecast transactions. deferred does incremental our any include -- we gross Jordan,

Jordan Levy

Thanks, appreciated.

Shai Even

in at more because but point, from that of the we regard of one-time collection additional at not a that quarter, to gross looking about should cash million. way looking $X operating margin as would it's from transaction, Jordan, cash would that, for economic customer the like viewed of of is part it's part I activities. that collected like are the have That be say be an $X to we we're of that I a did a should flow sales million like CFFO type perspective an activity. that financing our

Jordan Levy

I appreciate Thanks, it.

Shai Even

you. Thank

Operator

session. question-and-answer our concludes This

ahead. Thomas like Meth Please to for back turn I'd Now over the go remarks. conference to closing

Thomas Meth

to on our wish around reductions a our look taking Well, thank continue coming day. forward cost -- you the connecting your operations, updating progress, of the on us you rest to We join particularly in time you and to our months today. great in for

Operator

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

may disconnect. You now

Enviva (EVVAQ) 3 Aug 232023 Q2 Earnings call transcript