Enviva Inc.

and is the first of many we see ahead as we work with large industrial customers around the world to not only decarbonize their energy supply chain, but also to make their difficult-to-abate industrial processes less greenhouse gas intensive and more sustainable. Our initial tranche under the industrial contract I referenced is for 60,000 metric tons per year of wood pellets, with a tenor of 10 years. We expect deliveries to commence in 2023, subject to certain conditions precedents. As our new customer brings on additional production trains each year over the following five years, we, as their sole source wood pellet supplier, forecast our contracted volumes to grow in lockstep, growing to an expected 1.2 million metric tons per year once the customer's production capacity is fully ramped. I will discuss our third quarter financial results in more detail, which were right in line with the expectations we outlined several weeks ago. As I shared with you during our simplification transaction and conversion call, we expected to generate between 61 million and 65 million of adjusted EBITDA for the quarter, and we landed at the midpoint of that range, delivering about $63 million. Based on the durability of our business model and the strong cash flow visibility we have going forward, our board of directors declared a distribution of 84 cents per unit for the third quarter of 2021. an 8.4% increase over the distribution paid for the same quarter of last year. This represents our 25th consecutive distribution increase since our IPO and maintains the 12% distribution CAGR we have delivered since then. We are also reaffirming the full year 2021 and 2022 guidance we discussed recently, which we updated alongside our simplification transaction and conversion announcement. From a distribution standpoint, We are reaffirming $3.30 per share for full year 2021 and $3.62 per share for 2022. Returning capital to our shareholders has always been a critical part of the way we manage our business. And like all great things about InViva, that's not going to change with the simplification of our structure and conversion to a corporation. As InViva Inc., our dividend policy will continue to reflect the fundamental commitment we have to deliver a stable, durable, and over time, growing return of capital to our shareholders. Now I'd like to turn it over to Shai to share more detail on our third quarter results and financial highlights.

Thank you, John, and good morning, everyone. For the third quarter of 2021, we generated net revenue of $237 million, which represents a 5% increase over the corresponding quarter of 2020. The increase in net revenue is a result of incremental product sales as we ramp deliveries to new customers and deliver larger volumes to existing customers. This increase in revenue and product sales volume was temporarily dampened by COVID-related issues experienced by our contractors and supply chain partners, although we believe these issues are beginning to be behind us. Adjusted gross margin for the third quarter of 2021 was approximately $57 million, which was relatively flat as compared to the third quarter of 2020. Adjusted gross margin per metric ton was approximately $48 for the third quarter of 2021, down slightly from the $50 per metric ton achieved in the third quarter of 2020. The decrease in adjusted gross margin per metric ton was primarily attributable to the issues that affected our revenue and product sales volumes I just discussed. Net income was almost break-even for the third quarter of 2021 as compared to net income of $1.4 million for the third quarter of 2020. Adjusted net income was $28 million for the third quarter of 2021 as compared to adjusted net income of $16 million for the corresponding quarter in 2020. Adjusted net income increased by 76% when comparing the third quarter of 2021 with the third quarter of 2020. As John mentioned earlier, NVIVA generated adjusted EBITDA of approximately $63 million for the third quarter of 2021, an increase of approximately 16% from the third quarter of 2020. The increase in adjusted EBITDA was primarily due to the benefits of the Luzdal plant and Pasigula terminal acquisitions. Distributable cash flow was $49.5 million for the third quarter of 2021, which represents a 17% increase from the corresponding quarter in 2020. Our distribution coverage ratio on a cash basis for the third quarter of 2021 was 1.13 times When we refer to distribution coverage being on a cash basis, it means we are not factoring in the 9 million units issued as part of the simplification transaction that are subject to the dividend reinvestment commitment. Our liquidity as of September 30th, 2021, which included cash on end and availability under revolving credit facility was $192 million. As we convert from a partnership to a corporation, Enviva's commitment to conservatively managing its balance sheet is unchanged. We now expect to fund future growth projects increasingly with cash flow generated from the business and will be transitioning to a fully self-funding growth model for capital expenditures over the next five years, with timing dependent on the cadence of new plant construction. Our long-term dividend coverage ratio target is 1.5 times on an annual cash basis, and we expect to have the financial flexibility to increase dividends over time. As we near the close of 2021 and with solid visibility into 2022, we reaffirmed our full year 2021 and 2022 guidance. As Kate mentioned at the beginning of our call, our guidance for full year 2021 does not reflect a potential recast of our historical results, which may be required under GAAP due to the simplification transaction. The important takeaway from our guidance is that we expected adjusted EBITDA to increase by 20% when compared full year 2021 to 2020, and we expected adjusted EBITDA to increase by another 20% or more when we compare 2022 to 2021. There just isn't another company with a similar profile of visible, durable cash flows growing at this rate. And we believe we have much more shareholders' value yet to unlock. Now I would like to turn it back to John.

Thanks, Shai. The future has truly never been brighter for Enviva. We are entering 2022 with a contracted revenue backlog of over $21 billion. which is complemented by a similarly large and growing customer pipeline. This customer pipeline is high quality and diverse. We continue to have a healthy number of opportunities in our traditional markets for biomass fired power and heat generation, notably in the United Kingdom and the European Union, where Germany and Poland represent sizable addressable markets for us. Asia continues to offer a material source of growth, which includes incremental demand from Japan, emerging potential in Taiwan, and maturing opportunities in South Korea. We talked about the burgeoning industrial demand earlier on the call, specifically demand for sustainable aviation fuel and biodiesel, but that is only a fraction of the picture. The full addressable industrial market is truly exponential when you layer in the potential for decarbonizing industries like steel, cement, lime, and the chemical verticals. Over the next 12 months, we expect to continue our successful track record and convert a number of our pipeline opportunities into binding long-term contracts, in addition to firming a previously signed exclusive memoranda of understanding. Given our robust contracted position and growing demand profile, we are also aggressively growing our production capacity. Earlier this year, we acquired the Losedale plants in Pascagoula Terminal and expect each to be ramping up production during the first half of 2022. The Losedale plant increases our production capacity by roughly 14%. Additionally, we have a series of highly accretive projects underway and nearing completion, namely the Mid-Atlantic, the Multi-Plant, and the Greenwood expansions. These expansion projects, when combined, represent a capacity increase similar to a new mid-sized plant. As we look further out to meet the growing demand for our products, We acquired projects at 15 plant sites as part of our simplification transaction, all in various stages of evaluation and development. One is the fully contracted EPS plant, which is currently under development. We expect to commence construction in early 2022 with an in-service date scheduled for mid 2023. EPS is designed and permitted to produce more than one million metric tons per year of wood pellets, which would make it the largest wood pellet production plant in the world. We think our next most likely greenfield plant is in Bond, Mississippi, which we are designing to produce between 750,000 and more than 1 million metric tons per year of wood pellets. We expect construction of Bond to commence once EPS is operational, but the timing of construction could be expedited depending upon the schedule and delivery requirements of additional off-day contract opportunities under negotiation and general market conditions. Shaping a secure and sustainable energy future continues to be at the forefront of the global energy dialogue, and I'm very excited to have accepted an invitation to present next week at COP26 to respected climate and energy authorities and policymakers from around the world about the important and well-recognized role that modern bioenergy plays as a part of the global solution to climate change. Our renewable products help our customers meet their net-zero targets and we expect our own net zero commitments to further reinforce our environmental leadership and reputation for sustainability. We are in a very fortunate position to have built a business that, by design, generates only a modest level of emissions from our own operations. We recently announced a 10-year contract with Green Gas USA, an integrated renewable natural gas solutions provider, to decarbonize natural gas-related emissions in our own operations. We have built a track record of making important commitments and then delivering on them with a broad range of stakeholders. This renewable natural gas contract is a big step towards our net zero commitment. And since it is expected to display 75% of our current scope one emissions on an annual basis, it is something we are particularly proud of. Before we close, I want to recap what has made 2021 such an incredible year for Enviva for our team, and for our stakeholders. First, we completed the sizable acquisition of the Losedale plant and Pascagoula terminal, simultaneously with a successful equity offering, and concurrently with our Mid-Atlantic, Multiplant, and Greenwood expansions all underway. Second, we completed our simplification transaction and commenced the process to convert to a corporation, a milestone we expect to complete by year end. Third, we signed our inaugural industrial contract, one which we expect to be just the first of many as we expand our customer base into the rapidly growing industrial sector, a sector that could drive exponential growth for us. And finally, we accomplished all of this while delivering pure leading returns to our equity holders. We're fortunate to be able to define our company in relatively simple terms. The world continues to want less carbon, more quickly, and more cost-effectively. And that's exactly what we offer. We are incredibly privileged to have the opportunity to continue to build a company and a unique platform that was great as a partnership and will be even better as a corporation at delivering real climate change benefits today while consistently, safely, and sustainably generating superior returns for all of our stakeholders. Now let's open up the call for questions.