Enviva reaffirms FY18 adjusted EBITDA, distributable cash flow growth
Enviva said, "The full-year 2018 adjusted EBITDA and distributable cash flow we guided to in our earnings release on February 22, 2018 remain achievable, but, as noted above, are partially dependent upon the amount of recoveries from our insurers and other responsible parties, the timing and performance of which are not entirely within our control and which may straddle quarters and possibly extend into 2019. With our confidence in the underlying long-term stability of the business and our expectation of the recoverable nature of the costs of the Chesapeake incident, we are reaffirming our guidance for distributions of at least $2.53 per common and subordinated unit for full-year 2018, with quarter over quarter increases expected throughout the year." The company added, "we do not believe the underlying profitability or cost position of our business will be affected once the Chesapeake terminal returns to full operation. The events that took place in Chesapeake are financial and operational risks we identified as part of our industrial risk management process, and we believe substantially all of the costs resulting from the incident are recoverable through our insurance or other contractual rights. We expect we will bear the immediate costs of the event, including emergency response costs, inventory and asset write-offs, and inventory disposal, in the first quarter of 2018. Specifically, the value of the lost inventory, inclusive of disposal costs, and emergency response costs are expected to be in the range of $10 million to $12 million and $8 million to $10 million, respectively. We expect the cost to repair damage to the terminal to be between $4 million and $8 million. Our insurance group has been collaborative and responsive-we already have received substantial advance payments from them-and, despite the incremental cash costs borne by us prior to receipt of insurance proceeds or other recoveries, we remained undrawn on our $100 million revolver at the end of the first quarter. We anticipate that these event-related costs, which are included in our financial results as a reduction of net income, will be added back in our calculation of adjusted EBITDA. Business continuity costs, however, are expected to reduce adjusted EBITDA in both the first and second quarters. The incremental costs of our extended logistics chain are expected to be approximately $4 million per month through June 30, when we expect the terminal to return to full service. We also expect substantially all of these operational costs to be recoverable under our insurance policies, but the timing of the incurrence of the costs and their recovery will not match. Given this potential timing mismatch, our reported adjusted EBITDA will include variability between quarters that does not reflect the underlying ratable performance of the business and our quarterly distribution coverage ratios may not be comparable to those for previously reported periods or our targets for the full year."