BETHESDA, Md.--(BUSINESS WIRE)--Enviva Inc. (NYSE: EVA) (“Enviva” or the “Company”), a leading producer of sustainably sourced wood-based biomass, today announced that it has entered into two Restructuring Support Agreements (“RSAs”): one RSA with an ad hoc group of holders (the “Ad Hoc Group”) representing approximately 72% of its senior secured credit facility, approximately 95% of its 2026 senior notes, approximately 78% of bonds related to its Epes, Alabama plant currently under construction (“Epes”), a ...

Restructuring Support Agreement - The Restructuring Support Agreement will become effective upon execution by the required percentage of creditors[13]. - The definitive documentation for the Restructuring will include the Plan and all related exhibits and schedules[19]. - The restructuring transactions will be subject to the completion of definitive documentation and approval rights of the parties involved[2]. - The Debtors are committed to completing the Restructuring as outlined in the Plan and will use commercially reasonable efforts to meet all milestones set forth in the Agreement[33]. - The Debtors will not solicit proposals for any restructuring transaction other than the Restructuring, ensuring focus on the current plan[34]. - The Debtors must provide timely notice of any events that could materially affect the Restructuring or lead to a breach of the Agreement[35]. - The Debtors are required to operate their business in the ordinary course and consistent with past practices during the Chapter 11 process[35]. - The Debtors will support the MS Bond Settlement and Epes Bond Settlement without imposing additional costs on any party[30]. - The Debtors are obligated to obtain all necessary governmental and regulatory approvals for the implementation of the Restructuring[33]. - The Debtors must oppose any third-party motions that could disrupt the Restructuring process[33]. - The company is required to comply with each milestone set forth in the restructuring agreement[40]. - The restructuring support parties have the right to terminate their obligations if any changes adversely affect the treatment of their claims compared to other classes[42]. - The company must negotiate in good faith to address any legal or structural impediments that may delay the restructuring[40]. - The holders of at least two-thirds of the 2026 Notes Claims can terminate the agreement if the company fails to meet any milestones[45]. - The company is prohibited from entering into any definitive agreements for mergers or acquisitions without prior consent from the majority consenting noteholders[40]. - Any material breach of the agreement by the company can lead to termination by the restructuring support parties[46]. - The company is not allowed to file any motions inconsistent with the restructuring agreement[40]. - The restructuring support parties can terminate their obligations if the company supports any alternative transaction without consent[46]. - The Debtors may terminate obligations under the Agreement upon the occurrence of specific events, known as "Debtor Termination Events"[49]. - The Agreement can be mutually terminated by written agreement among the Debtors and Restructuring Support Parties[50]. - A material breach by a Restructuring Support Party that remains uncured for five business days may lead to termination of the Agreement[51]. - The Debtors must comply with obligations to provide access and information to Restructuring Support Parties and Advisors[53]. - The Agreement will automatically terminate upon the occurrence of the Effective Date[50]. - The Debtors acknowledge that interest on all principal and interest related to the Senior Secured Credit Facility Loans will continue to accrue from the Petition Date[57]. - The Debtors will pay or reimburse all reasonable and documented fees and expenses related to the restructuring, including those for legal and financial advisors[58]. - The Agreement is legally valid and binding, enforceable against each Debtor in accordance with its terms, subject to bankruptcy laws[64]. - Each Restructuring Support Party represents that it has the requisite authority to enter into the Agreement and perform its obligations[62]. - The Agreement does not constitute a solicitation for acceptances to the Plan until the Disclosure Statement is received[60]. - The Parties reserve their rights if the transactions contemplated in the Agreement are not consummated[66]. - The agreement requires prior written consent from affected lenders for any modifications that disproportionately affect their claims[71]. - The company has waived the right to a jury trial in any disputes arising from the agreement, opting for bench trials instead[73]. - The agreement is governed by the laws of the State of New York, with exclusive jurisdiction in New York courts[72]. - The company emphasizes that no third-party beneficiaries are intended under the agreement, which is solely for the benefit of the parties involved[74]. - All notices related to the agreement must be in writing and delivered to specified addresses[75]. - The agreement constitutes the entire understanding between the parties, superseding all prior negotiations and agreements[79]. - The company reserves the right to protect its claims and defenses, even if the restructuring plan is not consummated as outlined[82]. - Public disclosures regarding the agreement are subject to confidentiality provisions, with certain exceptions for legal requirements[81]. - The agreement allows for electronic execution and delivery of counterparts, facilitating the signing process[80]. Chapter 11 Process - The Restructuring will be implemented through jointly administered voluntary cases under Chapter 11 of the Bankruptcy Code[9]. - The Debtors plan to commence Chapter 11 Cases by filing petitions for relief no later than March 12, 2024[25]. - The Debtors aim to obtain entry of the Interim DIP Order within seven calendar days after the Petition Date[25]. - The Debtors are required to file the Plan and Disclosure Statement with the Bankruptcy Court no later than 120 calendar days after the Petition Date[27]. - The Bankruptcy Court is expected to enter the Confirmation Order no later than 185 calendar days after the Petition Date[27]. - The Debtors will have consummated the transactions contemplated by the Plan no later than 205 calendar days after the Petition Date[27]. - The Debtors will seek to reject certain Rejected Customer Contracts within 45 calendar days after the Petition Date[25]. - The Debtors will hold weekly update calls with the Ad Hoc Group to discuss business operations and the progress of the Chapter 11 Cases[35]. - The Bankruptcy Court's order granting relief from the automatic stay could materially affect the Debtors' ability to operate[48]. - The Debtors must provide draft copies of significant motions and press releases to the Ad Hoc Group at least three business days prior to filing[53]. Financing and Capital Structure - The proposed DIP financing includes a total of $500 million, with Tranche A and Tranche B each amounting to $250 million, where Tranche A can be converted into reorganized equity[109]. - The company aims to negotiate a new 1L RCF of $750 million, which will be secured by a first lien on substantially all assets[108]. - The Management Incentive Plan (MIP) will grant 3.5% of reorganized equity in the form of RSUs at emergence, with an additional 6.5% at the discretion of the new board[108]. - The restructuring plan anticipates a valuation ceiling based on total enterprise value (TEV) equal to the sum of prepetition secured debt claims plus anticipated DIP loans[108]. - The company plans to repay Tranche B DIP and any Tranche A amounts not converted at emergence using proceeds from the new financing[108]. - Existing equity holders will have the ability to participate in the company-allocated portion of the DIP commitments[109]. - The restructuring proposal includes provisions for customary minority investor protections and information rights[108]. - DIP loans will include an option to be repaid in cash at par plus a 3% Exit Fee or converted into equity at a discount equivalent to the ERQ discount[110]. - A maximum variance of $2 million or 15% is permitted for liquidity covenants, excluding professional fees and expenses[110]. - Minimum liquidity covenant set at $30 million, tested daily[110]. - Weekly testing of adequate protection claims and liens, with new budgets issued every four weeks[110]. - Filing of an Acceptable Plan of Reorganization and Acceptable Disclosure Statement by the Debtors is scheduled for T + 120 days[110]. - Entry of the Final DIP Order is expected by T + 35 days[110]. - Monthly financial reporting will include bi-weekly variance reporting and updated budgets due every four weeks[110]. - DIP lenders will have access to a private side datasite for critical vendor and contract negotiation reports on a weekly basis[110]. - The Exit Fee will be 5% if repaid in cash for reasons other than declining the Conversion Option[110]. - Customary professional fee carveout to be agreed upon as part of the DIP terms[110]. Stakeholder Engagement - The Debtors will deliver an initial draft of their revised long-term business plan to the Ad Hoc Group no later than 90 calendar days after the Petition Date[25]. - The restructuring support parties are committed to cooperate with the Debtors to obtain approval of the DIP Financing[27]. - The Debtors will negotiate modifications to certain Customer Contracts with key customers in consultation with the Ad Hoc Group[29]. - The Debtors will provide the Ad Hoc Group with documentation related to any unsolicited Alternative Transaction Proposals received[34]. - Transfers of Company Claims/Interests are restricted unless the transferee agrees in writing to be bound by the Agreement[54]. - Qualified Marketmakers are exempt from becoming Restructuring Support Parties for certain transfers of Company Claims/Interests[55].

Financial Data and Key Metrics Changes - Net revenue decreased approximately 2% year-over-year due to lower commercial services activity, which dampened revenue per metric ton, offsetting volume improvements [6] - Net loss for Q3 2023 was $85 million compared to $18 million for Q3 2022, primarily due to four factors including lower average sales prices and higher interest expenses [6][14] - Adjusted EBITDA for Q3 2023 was $36.6 million, down from $60.6 million in Q3 2022, driven by a 17% decrease in revenue per metric ton and higher SG&A expenses [33] Business Line Data and Key Metrics Changes - Production improvements led to a 14% year-over-year increase in sales volumes and a 10% sequential increase compared to Q2 2023 [23] - Delivered at port costs were $152 per metric ton in Q3 2023, down $9 from $161 per metric ton in Q2 2023 [23] Market Data and Key Metrics Changes - Average spot market prices for Q3 2023 were approximately 50% lower than in Q4 2022, significantly impacting revenue expectations [7] - Biomass spot market prices this year did not evolve as anticipated, leading to a significant miss in expectations for Q3 and a reduction in Q4 expectations [29] Company Strategy and Development Direction - The company is executing a multifaceted transformation plan focusing on improving contract profitability and restoring credibility among stakeholders [4][11] - A corporate restructuring program has been initiated, resulting in restructuring costs including severance expenses [24] - The company is evaluating potential alternatives to alleviate liquidity impacts from previous transactions [30] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over the quarter's performance and acknowledged the challenges posed by liquidity factors and lower expected commercial activity [5][26] - Despite near-term challenges, management remains optimistic about the long-term value in the biomass industry and aims to strengthen the company's position for future growth [31][48] Other Important Information - Liquidity at the end of Q3 2023 was $440 million, including $315 million of unrestricted cash [15] - The company has drawn the full amount available under its $570 million senior secured revolving credit facility [15] Q&A Session Summary - There was no live Q&A session held during this conference call, and management indicated that they would provide updates and address questions in the future [19][47]

Financial Performance - Enviva's net revenue decreased by $5.1 million year-over-year, from $325.7 million in 3Q22 to $320.6 million in 3Q23[15] - The company reported a net loss of $85.2 million in 3Q23, a significant increase from the $18.3 million net loss in 3Q22[15] - Adjusted EBITDA decreased by $24 million, from $60.6 million in 3Q22 to $36.6 million in 3Q23[15] - Average sales price per MT(Metric Ton) decreased by 17% from 3Q22 to 3Q23[16] - Gross margin per MT decreased from $25.28 in 3Q22 to $9.90 in 3Q23[15] - Adjusted gross margin per MT decreased from $59.99 in 3Q22 to $39.66 in 3Q23[15] Cost Reduction and Production - Delivered At Port (DAP) costs decreased by $9 per MT from $161 in 2Q23 to $152 in 3Q23[10, 17] - Production increased by approximately 5% from 2Q23 to 3Q23[17] Liquidity and Capital Structure - Total liquidity as of September 30, 2023, was $440 million, including $315 million of unrestricted cash and $125 million of restricted cash[22] - Net debt was $1.394 billion as of September 30, 2023[22]

Production and Sales - The company expects a production volume of approximately 5.0 million metric tons of wood pellets in 2023, which is fully contracted [137]. - Wood pellet pricing in 2023 has been approximately 51% lower for the three months and 50% lower for the nine months ended September 30, 2023, compared to the fourth quarter of 2022 [143]. - Sales volumes of wood pellets increased by 12% in Q3 2023 compared to Q3 2022, indicating improved plant utilization [170]. - Product sales revenue decreased by $16.0 million, or 5%, to $306.9 million for the three months ended September 30, 2023, primarily due to a 17% decrease in average sale price per metric ton [169]. - Product sales for the nine months ended September 30, 2023, reached $855.3 million, a slight increase of 1% from $847.5 million in the same period of 2022, driven by an 8% increase in sales volumes [186]. Financial Performance - The net loss for the three months ended September 30, 2023, was $85.2 million, compared to a net loss of $18.3 million for the same period in 2022 [168]. - Adjusted EBITDA for Q3 2023 was $36.6 million, down from $60.6 million in Q3 2022, primarily due to decreased adjusted gross margin and increased legal and financial advisory expenses [183]. - Adjusted net loss for the nine months ended September 30, 2023, was $31.9 million, a decrease of $223.8 million compared to a net loss of $255.7 million for the same period in 2022 [197]. - The net loss for Q3 2023 was $85.2 million, compared to a net loss of $18.3 million in Q3 2022, reflecting a significant increase in losses [182]. - Total interest expense surged to $43.8 million in Q3 2023, up from $18.7 million in Q3 2022, largely due to higher interest rates and Q4 2022 Transactions [180]. Expenses and Costs - Total operating costs and expenses increased by $37.2 million to $364.1 million for the three months ended September 30, 2023, compared to the same period in 2022 [168]. - Cost of goods sold rose to $268.2 million in Q3 2023, a 4% increase from $257.5 million in Q3 2022, primarily due to a 14% increase in product sales volumes [173]. - Total operating costs for the nine months ended September 30, 2023, increased to $1.015 billion from $904.2 million in 2022, reflecting a rise in cost of goods sold and restructuring expenses [185]. - Cost of goods sold increased to $781.6 million for the nine months ended September 30, 2023, from $718.9 million for the same period in 2022, representing a 9% increase [188]. - Selling, general, administrative, and development expenses decreased to $80.5 million for the nine months ended September 30, 2023, from $91.8 million for the same period in 2022, a decrease of $11.3 million [190]. Impairments and Restructuring - The company recognized an impairment expense of $21.2 million due to the permanent shutdown of an underperforming dryer line at the Southampton plant [146]. - The company implemented a restructuring plan in Q2 2023, resulting in pre-tax restructuring expenses of $19.842 million for the nine months ended September 30, 2023 [149]. - The Amory plant in Mississippi sustained damage from a tornado, leading to a $1.2 million impairment recorded in cost of goods sold, with an expected $9.0 million investment to resume operations [152]. Liquidity and Financing - The company raised $249.1 million through a private placement of Series A Preferred Stock, issuing 6,605,671 shares, with net proceeds of $247.9 million intended for growth capital and general corporate purposes [150]. - Liquidity as of September 30, 2023, was $315.2 million, excluding cash restricted for construction projects [201]. - The company anticipates potential covenant breaches under its senior secured credit facility as early as December 31, 2023, due to operational challenges and liquidity constraints [145]. - The company is evaluating a potential deferral of up to 12 months for the construction of the Bond plant due to ongoing liquidity management initiatives [137]. - The company is maintaining a disciplined approach to capital expenditures while navigating leverage and liquidity challenges [205]. Market and Economic Conditions - Inflationary pressures have impacted labor rates and supplier costs, potentially affecting profitability and cash flows if not mitigated [160]. - The average sales price per metric ton (MT) for biomass was approximately $200 to $220 in Q3 2023, significantly lower than over $400 per MT in Q3 2022, reflecting a less favorable pricing environment [170]. - The company entered into agreements to sell and purchase wood pellets at fixed prices, which may negatively impact profitability if market prices do not increase significantly [140]. Other Financial Metrics - Adjusted gross margin decreased to $56.8 million in Q3 2023 from $75.4 million in Q3 2022, with adjusted gross margin per MT dropping from $59.99 to $39.66 [175]. - Total interest expense rose to $136.4 million for the nine months ended September 30, 2023, compared to $42.6 million for the same period in 2022, an increase of $93.8 million [194]. - Adjusted EBITDA was $66.0 million for the nine months ended September 30, 2023, down from $136.6 million for the same period in 2022, a decrease of $70.6 million [199]. - Deferred revenue increased by $94.5 million during the nine months ended September 30, 2023, contributing to favorable changes in working capital [207].

Financial Performance & Guidance - Enviva has a contracted backlog of approximately $23 billion with credit-worthy customers, driving strong cash flows[1] - Sold volumes of 13 million metric tons[3] - The company is executing cost improvements, targeting $100 million in savings[42] - Full-year 2023 CAPEX guidance is lowered to a range of $335 million to $365 million, representing a 10% decrease at the midpoint[57] - The company reaffirms its full-year 2023 Adjusted EBITDA guidance, with expectations for improvements in the second half of the year[40] Production & Operations - Enviva has a nameplate production capacity of approximately 62 million metric tons per year[17] - The company is investing in plant productivity and cost improvements[34] - Corporate restructuring is expected to provide $16 million in reduced cash costs on an annualized basis[42] - The company is focused on investments in the productivity and operational improvement of current assets[48] Growth & Market - The customer sales pipeline exceeds $52 billion, driven by energy transition tailwinds[17] - The company expects to expand its customer mix from 20 customers in 2022 to approximately 40 customers in 2025[77] - The company anticipates that deliveries to its largest customer will be approximately 15% of total deliveries by 2025[98]

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

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Exact name of registrant as specified in its charter) (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 7272 Wisconsin Ave. Suite 1800 Bethesda, MD 20814 For the quarterly period ended June 30, 2023 or ☐ 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 0 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or (Exact name of registrant as specified in its charter) (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 7272 Wisconsin Ave. Suite 1800 Bethesda, MD 20814 (Address of principal executive offices) (Zip code) (301) 657-5560 ☐ ...

Kate Walsh - Vice President of Investor Relations Thomas Meth - President and Chief Executive Officer Shai Even - Executive Vice President and Chief Financial Officer Operator Kate Walsh During the course of our remarks and the subsequent Q&A session, we will be making forward-looking statements, which are subject to a variety of risks. Information concerning the risks and uncertainties that could cause our actual results to differ materially from those in our forward-looking statements can be found in our ...