Enviva Inc.

Good morning and welcome to the NBWAS Inc second quarter of 2022 earnings conference call. All participants will be in the listen only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your questions, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Kate Walsh, Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and welcome to NViva Inc.' 's second quarter of 2022 earnings conference call. We appreciate your interest in and support of NViva, and thank you for your participation today. On this morning's call, we have John Kepler, Chairman and Chief Executive Officer, Thomas Mess, President, and Shai Evans, Executive Vice President and Chief Financial Officer. Our agenda will be for John, Thomas, and Shai to discuss our financial and operational results and provide an update on our current business outlook and operations. Then, we will open up the call for questions. 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 earnings release, as well as in our other SEC filings. We assume no obligation to update any forward-looking statements to reflect new or changed events or circumstances. In addition to presenting our financial results in accordance with GAAP, we will also be discussing adjusted EBITDA and certain other non-GAAP financial measures pertaining to completed reporting periods as well as our forecasts. Information concerning the reconciliations of these non-GAAP measures to their most directly comparable GAAP measures and other relevant disclosures is included in our earnings release. It is important to note that as a result of our simplification transaction that we announced on October 15, 2021, We were required to recast our historical financial results in accordance with GAAP to reflect that transaction. Today, we will discuss 2021 historical financial results on a recast basis or a non-recast basis, depending on the reference point. Please refer to our earnings release and the Form 10-Q document for more details on our recast and non-recast presentations. I would now like to turn the call over to John.

Thank you, Kate. Good morning, everyone, and thanks for joining us today. As you saw in our press release and 10Q filed yesterday, the last few months have been a particularly productive and exciting time for InViva. Since we were last together, we've had the opportunity to meet with a broad spectrum of our current investor base and new investors as well. In these meetings, in spite of the remarkable progress and results we have delivered in the now more than seven years since our IPO, I'm consistently reminded that InViva remains a show-me story. That's because there just aren't any pure-play publicly traded comps like many other industries have. And even with our track record of significantly outperforming benchmark indices like the S&P 500, the MSCI ESG Index, and the Russell 1000 over the past one-year and three-year periods, there still aren't any companies like us in almost any industry with anything close to our long-term contracted revenue base, our durable cash flow and dividend, our strong growth profile, ESG attributes, and margin expansion opportunities across a wide range of economic and business cycles. That's what makes us unique, but it also means we need to continue to do a good job communicating what's going on in our business, what we expect to happen given the actions we're taking and the investments we are making, and then consistently reporting back on how well we are doing with keeping those promises. So, if we look back at our last conversation together, we described three important things we expected to deliver this quarter. First, we said we expected that we would continue to make good progress improving our operating profile and cost position coming out of a challenging first quarter. In our brief flash to the market about six weeks ago, we reinforced just that. highlighting that we expected Q2 to deliver adjusted EBITDA in the range of $35 to $40 million. And today, we are pleased to report that, based on improvements we realized in both production and cost, we delivered results at the top end of that range and set the stage for a very significant back half of the year. Second, we outlined the increasing production ramp that our newly commissioned and fully contracted Losedale Pellet Production Plant and increasing shipments from our new deepwater marine terminal in Pascagoula, Mississippi. Both of these remain on track and are a big part of the projected EBITDA uplift in the latter part of this year. We also talked about starting construction on our Alabama plant and our ability to potentially access new sources of debt capital to finance fully contracted plants like this. EPS is now in construction, with ground clearing, civil work, site prep, and major equipment deliveries beginning to commence. We have also filed the air permit application for our next plant in Vaughan, Mississippi. And in the midst of some pretty significant capital markets volatility, we were able to tap the tax-exempt bond market for our $250 million issuance, with a 10-year tenor priced attractively at 6% inside our prior long-term notes, reducing our cost of capital. That's a strategy and structure that is replicable for us, and we have already received a similar inducement agreement, giving us confidence that we will be able to access the tax-exempt market when appropriate for our bond Mississippi facility. Finally, we described the progress we expected to continue to make executing new long-term off-day contracts and our expectations about converting existing MOUs and LOIs to binding contracts. Today, we are very pleased to announce the signing of four new contracts across a broad range of both utility and industrial counterparts that do exactly that and ultimately could add over 8 million metric tons of new demand with contracts that range in duration from five to more than 15 years. What we did not expect to realize as quickly as we have is the substantial increase in pricing that we have been able to secure both within our current contract portfolio given our pricing escalation and pass-through provisions, as well as the increasing willingness and ability to pay higher prices from our new and growing customer set, who face an even more challenging pricing environment, given the limited alternatives available for stable fuel supply and low-carbon substitutes. It's important to note that the constructive market conditions from which we are benefiting today are translating into permanent margin improvements for us. And that's happening at the same time that we're seeing our overall cost tower come down. We are benefiting not only from enhanced purchasing power as we expand in size and scale, but we are also unlocking value from taking advantage of existing operational leverage within our asset base. And as expected, we are seeing fixed cost absorption rates improve in tandem with increased production. And should we find ourselves in a period of global economic contraction that reduces costs for labor, steel, trucking, and consumable goods, we stand to not only maintain, but truly strengthen our operating position and financial results. Focusing in on what to expect for the rest of 2022, you will recall from our previous discussions that the first quarter of the year is typically our seasonally softest quarter, and thus the first half of the year usually represents about one-third of our earnings for the year. The fourth quarter is typically our seasonally strongest quarter, with the back half of the year representing about two-thirds of our earnings. And we are set up for what we expect to be a record fourth quarter, both in terms of EBITDA and margin per ton. Given this advantage backdrop, we are reaffirming our adjusted EBITDA guidance for 2022 in the range of $230 million to $270 million, and our 2022 dividend guidance of $3.62 per share, which represents a 10% increase over 2021. And we see a clear path to further increasing return of capital to shareholders over time, especially as we continue to project EBITDA for 2023 in the range of $305 to $335 million and project that 2024 could achieve a further 25% uplift over that range. InViva is a rare combination of a pure-play ESG company with a growth trajectory and a dividend yield that are both in the 90th percentile of the S&P 500 companies. We are the largest global player in an industry where the total addressable market is rapidly expanding and new use cases for our products continue to emerge. We are virtually unmatched in terms of the fully contracted nature of our business and the highly visible and durable cash flow growth that our business generates. as well as the truly remarkable growth prospects ahead of us. I'll come back to give an update on our asset expansion plans and kick off our Q&A session. But first, I'd like to turn it over to Shai to discuss our financial highlights, and then to Thomas to give some important color on our market and contractual developments.