Financial Data and Key Metrics Changes - For the full year 2018, net revenue was $573.7 million, a 5.6% increase from 2017, with product sales revenue at $564 million compared to $522.3 million in 2017 [18] - Adjusted EBITDA for 2018 was $102.6 million, slightly up from $102.4 million in 2017, despite lower pricing impacting overall performance [20] - For Q4 2018, net revenue was $168.7 million, a 4.8% increase from $161 million in Q4 2017, with product sales revenue at $166 million compared to $156.1 million in the same period last year [21] Business Line Data and Key Metrics Changes - The company sold 3 million metric tons of wood pellets in 2018, up from 2.7 million metric tons in 2017, reflecting a 9.5% increase in sales volume [18] - Adjusted gross margin for the full year 2018 was $115.8 million, down from $123.6 million in 2017, with adjusted gross margin per metric ton decreasing to $38.81 from $45.38 [19] Market Data and Key Metrics Changes - The weighted average remaining term of the Partnership's offtake contracts is now 9.7 years, with a revenue backlog of $7.9 billion [29] - The company expects to serve incremental contracted demand through productivity increases and capacity expansions at its Northampton and Southampton production plants [36] Company Strategy and Development Direction - The company aims to maintain its leadership position as a preferred supplier in the industry, focusing on organic growth and diversifying its customer portfolio [13] - Expansion activities at the Northampton and Southampton plants are expected to be completed in the first half of 2020, with an incremental $30 million in adjusted EBITDA annually once ramped up [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2019, projecting adjusted EBITDA between $127 million and $135 million, and a distribution of at least $2.61 per unit [25] - The company highlighted the importance of sustainability and its commitment to displacing more than 64 million tons of coal through its operations [39] Other Important Information - The company declared a quarterly distribution of $0.64 per unit for Q4 2018, with a coverage ratio of 1.26 times, meeting its full-year distribution guidance [12] - The company adopted ASC 606 on January 1, 2018, affecting the presentation of its financial results [6] Q&A Session Summary Question: Higher production costs and margin impacts - Management clarified that higher production costs were influenced by seasonality and the impact of hurricanes, affecting fixed-cost absorption and gross margin per metric ton [45] Question: Distribution per unit guidance - Management indicated that the guidance provided does not account for potential drop-down acquisitions, and they expect a combination of organic growth and acquisitions to drive future distribution increases [47] Question: Domestic biomass market opportunities - Management acknowledged that the U.S. market is catching up in renewable energy investments and sees significant opportunities for biomass, although there is still work to be done [48] Question: Market share in Japan - Management noted that they are currently capturing a small share of the expected 15-20 million tons market in Japan, with plans to continue contracting at a steady pace [50] Question: Long-term funding plan and IDR burden - Management emphasized a conservative financial policy with a balanced approach to debt and equity, and noted that IDRs represent a small portion of total distributions [52][53] Question: Opportunities in Northern California - Management recognized the potential for biomass in wildfire risk mitigation but noted the challenges due to higher costs and logistics in that region [54] Question: Pricing trends - Management expects an increase in sales price per metric ton in 2019 due to contract escalation clauses, despite a decline in the previous year [56]