Enviva Inc., a leading wood pellet manufacturer, reported a net loss of $85.2 million for Q3 2023, a stark contrast to the $18.3 million loss in the same quarter last year. This result encompasses $21.2 million in asset impairments, $22.1 million in interest expenses related to repurchase accounting, and $6.3 million in restructuring costs not incurred in the previous year.
Despite the challenges, Enviva displayed progress in its operational transformation plan. The company increased metric tons sold by approximately 14% and 10% in Q3 2023 compared to Q3 2022 and Q2 2023, respectively. During third-quarter 2023, the company sold 1.433 million metric tons of wood pellets. Additionally, there was a noteworthy reduction in delivered at port ("DAP") costs per metric ton for Q3 2023, down to $152 from $161 in Q2 2023.
U.S. wood pellet exports increased 7% year over year to an all-time quarterly high in the third quarter of this year.
Enviva is actively addressing its cash flow and liquidity challenges, engaging advisors to conduct a comprehensive review of alternatives aimed at strengthening its capital structure, increasing liquidity, addressing contractual liabilities, and enhancing long-term profitability.
Thomas Meth, the President of Enviva, acknowledged the disappointment in Q3 2023 results, emphasizing a focus on renegotiating customer contracts to align with the value the company's product provides.
Net revenue for Q3 2023 totaled $320.6 million, a 2% decrease from the same period in 2022. Despite a 14% increase in volumes sold, lower wood pellet pricing in 2023 contributed to the decline.
The company's gross margin for Q3 2023 was $14.2 million, down from $31.8 million in Q3 2022. Adjusted EBITDA for Q3 2023 was $36.6 million, compared to $60.6 million in Q3 2022, primarily due to reduced pricing.
Enviva's liquidity as of September 30, 2023, was $440.7 million, including $315.2 million in unrestricted cash. The company had drawn the full amount available under its $570.0 million senior secured revolving credit facility.
Looking ahead, due to liquidity factors and lower commercial activity, Enviva has withdrawn previous guidance for sales price per metric ton, net loss, adjusted EBITDA, and total capital expenditures for 2023 and future years. The company is actively exploring alternatives to maintain compliance with covenants and improve liquidity, including renegotiating customer contracts and engaging in a comprehensive review of its capital structure.
In terms of greenfield construction, Enviva highlighted progress in the Epes facility and is considering a potential deferral of up to 12 months for the Bond facility. The company is committed to eliminating operational inefficiencies and recently shut down an underperforming dryer line at the Southampton plant.
Enviva's leadership realignment includes Glenn Nunziata taking on the role of interim CEO, with a focus on strengthening the company's balance sheet, while Thomas Meth remains President, concentrating on renegotiating customer contracts. Mark Coscio, Chief Development Officer, will assume the role of Chief Operating Officer, overseeing growth projects and plant and port operations.
