Enviva Partners, LP Completes Southampton Drop-down and Issues New Guidance

BETHESDA, Md.–(BUSINESS WIRE)–Enviva Partners, LP (NYSE:EVA) (“Enviva” or the “Partnership”)
today announced it has acquired the fully-contracted Southampton plant
from its sponsor’s joint venture with affiliates of John Hancock Life
Insurance Company. In addition, the Partnership provided an update
regarding expected 2015 results and guidance for 2016.


  • Acquired Southampton plant and 10-year take-or-pay off-take
    contract for $131 million
  • Increased production capacity to 2.2 million metric tons per year
  • Extended weighted average remaining term of off-take contracts to
    8.0 years
  • Provided 2016 distributable cash flow guidance of $2.71 to $2.87
    per unit

Southampton Drop-down

The acquisition includes the fully operational 510,000 metric tons per
year (“MTPY”) wood pellet production plant in Southampton County,
Virginia, a ten-year 500,000 MTPY take-or-pay off-take contract (385,000
metric tons in the first year), and a matching ten-year shipping
contract (collectively, the “Southampton Drop-down”). With this
transaction, the Partnership’s production capacity increases 29% to 2.2
million MTPY and, together with the ten-year take-or-pay off-take
contract announced on December 8, 2015, the weighted average remaining
term of its off-take contracts extends significantly to 8.0 years.

“We are excited to announce our first drop-down transaction with our
sponsor. The fully-contracted Southampton plant is a world-class
facility that fits seamlessly into our core business and will
significantly increase our production capacity and the tenor of our
contracted cash flows,” said John Keppler, Chairman and Chief Executive
Officer. “The acquisition, which is expected to be immediately accretive
to the Partnership’s distributable cash flow per unit, provides the
opportunity to substantially increase our distribution while still
maintaining conservative coverage ratios.”

The $131 million purchase price for the Southampton Drop-down was
financed with $36.5 million in debt, $15.0 million in equity issued to
the Partnership’s sponsor, and cash on hand. The debt was raised under
the Partnership’s existing credit agreement on the same terms and
conditions as the existing facilities. The Partnership’s total debt to
consolidated EBITDA ratio is expected to remain below its target of
3.0:1.0 in 2016, representing a conservative capital structure that is
well within the covenant thresholds in the Partnership’s credit
agreement. The Partnership’s sponsor supported the transaction by
acquiring 942,023 common units of the Partnership at a value of $15.92
per unit, resulting in the equity proceeds of $15.0 million.

“Having a strong sponsor is a major advantage during a period of choppy
financial markets,” said Mr. Keppler. “Our sponsor’s support ensured
that this highly accretive transaction was completed on schedule.”

The conflicts committee of the board of directors of Enviva’s general
partner, comprised entirely of independent directors, approved the terms
of the transaction. Evercore served as exclusive financial advisor to
the conflicts committee on the transaction. Andrews and Kurth, LLP
served as legal counsel to the conflicts committee. Vinson & Elkins
L.L.P. served as legal counsel to the sponsor’s joint venture.

Outlook and Guidance

The Partnership is expecting adjusted EBITDA and distributable cash flow
for the fourth quarter of 2015, exclusive of the Southampton Drop-down,
to be at or slightly above the high end of the expected ranges published
on November 5, 2015. Inclusive of the impact of the Southampton
Drop-down, the Partnership expects net income for 2016 to be in the
range of $43.0 million to $47.0 million and adjusted EBITDA to be in the
range of $83.0 million to $87.0 million. The Partnership expects to
incur maintenance capital expenditures of $4.1 million and interest
expense net of amortization of debt issuance costs and original issue
discount of $11.9 million in 2016. As a result, the Partnership expects
to generate distributable cash flow in 2016 in the range of $67.0
million to $71.0 million, or $2.71 to $2.87 per common and subordinated
unit. Other than the Southampton Drop-down, the guidance amounts
provided above do not include the impact of any potential acquisitions
from the Partnership’s sponsor or others.

“Adding the fully contracted Southampton plant to our portfolio of
existing production assets further enhances our ability to consistently
generate stable, growing cash flows,” said Mr. Keppler. “Part of our
success is due to the fact that our midstream business model, which
delivers sustainably generated renewable fuels to power generators, is
not tied to crude oil and natural gas market dynamics which have been so
disruptive to other MLPs and companies in the energy sector.”

About Enviva Partners, LP

Enviva Partners, LP (NYSE: EVA) is a publicly traded master limited
partnership that aggregates a natural resource, wood fiber, and
processes it into a transportable form, wood pellets. The Partnership
sells a significant majority of its wood pellets through long-term,
take-or-pay agreements with creditworthy customers in the United Kingdom
and Europe. The Partnership owns and operates six plants in Southampton
County, Virginia; Northampton County and Ahoskie, North Carolina; Amory
and Wiggins, Mississippi; and Cottondale, Florida. We have a combined
production capacity of approximately 2.2 million metric tons of wood
pellets per year. In addition, the Partnership owns a deep-water marine
terminal at the Port of Chesapeake, Virginia, which is used to export
wood pellets. Enviva Partners also exports pellets through the ports of
Mobile, Alabama and Panama City, Florida.

To learn more about Enviva Partners, LP, please visit our website at www.envivabiomass.com.

Non-GAAP Financial Measures

We view adjusted EBITDA and distributable cash flow as important
indicators of performance.

Adjusted EBITDA

We define adjusted EBITDA as net income or loss excluding depreciation
and amortization, interest expense, taxes, early retirement of debt
obligation, non-cash unit compensation expense, asset impairments and
disposals, and certain items of income or loss that we characterize as
unrepresentative of our operations. Adjusted EBITDA is a supplemental
measure used by our management and other users of our financial
statements, such as investors, commercial banks, and research analysts,
to assess the financial performance of our assets without regard to
financing methods or capital structure.

Distributable Cash Flow

We define distributable cash flow as adjusted EBITDA less maintenance
capital expenditures and interest expense net of amortization of debt
issuance costs and original issue discount. Distributable cash flow is
used as a supplemental measure by our management and other users of our
financial statements as it provides important information relating to
the relationship between our financial operating performance and our
ability to make cash distributions.

Adjusted EBITDA and distributable cash flow are not financial measures
presented in accordance with generally accepted accounting principles
(“GAAP”). We believe that the presentation of these non-GAAP financial
measures provides useful information to investors in assessing our
financial condition and results of operations. Our non-GAAP financial
measures should not be considered as alternatives to the most directly
comparable GAAP financial measures. Each of these non-GAAP financial
measures has important limitations as an analytical tool because they
exclude some, but not all, items that affect the most directly
comparable GAAP financial measures. You should not consider adjusted
EBITDA or distributable cash flow in isolation or as substitutes for
analysis of our results as reported under GAAP. Our definitions of these
non-GAAP financial measures may not be comparable to similarly titled
measures of other companies, thereby diminishing their utility.

The following table provides a reconciliation of the estimated range of
adjusted EBITDA to the estimated range of net income, in each case for
the twelve months ending December 31, 2016 (in millions):


31, 2016

Estimated net income $ 43.0 – 47.0
Depreciation and amortization 25.4
Interest expense 13.0
Non-cash unit compensation expense 1.2
Asset impairments and disposals 0.4
Estimated adjusted EBITDA $ 83.0 – 87.0

Cautionary Note Concerning Forward-Looking Statements

Certain statements and information in this press release, including
those concerning our future results of operations, acquisition
opportunities, and distributions, may constitute “forward-looking
statements.” The words “believe,” “expect,” “anticipate,” “plan,”
“intend,” “foresee,” “should,” “would,” “could,” or other similar
expressions are intended to identify forward-looking statements, which
are generally not historical in nature. These forward-looking statements
are based on the Partnership’s current expectations and beliefs
concerning future developments and their potential effect on the
Partnership. Although management believes that these forward-looking
statements are reasonable when made, there can be no assurance that
future developments affecting the Partnership will be those that it
anticipates. The forward-looking statements involve significant risks
and uncertainties (some of which are beyond the Partnership’s control)
and assumptions that could cause actual results to differ materially
from the Partnership’s historical experience and its present
expectations or projections. Important factors that could cause actual
results to differ materially from forward-looking statements include,
but are not limited to: (i) the amount of products that the Partnership
is able to produce, which could be adversely affected by, among other
things, operating difficulties; (ii) the volume of products that the
Partnership is able to sell; (iii) the price at which the Partnership is
able to sell products; (iv) changes in the price and availability of
natural gas, coal, or other sources of energy; (v) changes in prevailing
economic conditions; (vi) the Partnership’s ability to complete
acquisitions, including acquisitions from its sponsor;
(vii) unanticipated ground, grade, or water conditions; (viii) inclement
or hazardous weather conditions, including extreme precipitation,
temperatures, and flooding; (ix) environmental hazards; (x) fires,
explosions, or other accidents; (xi) changes in domestic and foreign
laws and regulations (or the interpretation thereof) related to
renewable or low-carbon energy, the forestry products industry, or power
generators; (xii) inability to acquire or maintain necessary permits;
(xiii) inability to obtain necessary production equipment or replacement
parts; (xiv) technical difficulties or failures; (xv) labor disputes;
(xvi) late delivery of raw materials; (xvii) inability of the
Partnership’s customers to take delivery or their rejection of delivery
of products; (xviii) changes in the price and availability of
transportation; and (xix) the Partnership’s ability to borrow funds and
access capital markets.

For additional information regarding known material factors that could
cause the Partnership’s actual results to differ from projected results,
please read its filings with the Securities and Exchange Commission,
including the prospectus filed on April 29, 2015 in connection with the
Partnership’s Initial Public Offering and the Quarterly Report on Form
10-Q for the quarter ended September 30, 2015. Readers are cautioned not
to place undue reliance on forward-looking statements, which speak only
as of the date thereof. The Partnership undertakes no obligation to
publicly update or revise any forward-looking statements after the date
they are made, whether as a result of new information, future events, or