Moody’s shifts Enviva view to negative

Moody’s Investors Service said it revised its outlook for Enviva Inc. to negative from stable and affirmed its Ba3 corporate family and probability of default ratings and the B1 rating on its guaranteed senior unsecured notes.

“The outlook revision to negative reflects financial performance that has missed Moody's previous expectations resulting in higher-than-expected leverage. Enviva has encountered headwinds on the cost front, particularly for diesel fuel and labor, as well as delays in ramping up production at its Lucedale plant which has caused the company to significantly lower its EBITDA guidance for FY 2022 to $230 million-$270 million from $275 million-$300 million,” the agency said in a press release.

Moody’s said it revised its debt/EBITDA estimate for FY 2022 to be in the low-6x area compared the previous 45.x projection.

“However, Moody's currently expects leverage to recover and approach mid-4x in FY 2023 because of incremental contribution from Lucedale, capacity expansions, increased pricing due to escalators and additional contract growth. Positively, the Russia-Ukraine military conflict has expanded the cost advantage of wood pellets compared to coal and should support higher prices for new contracts,” the agency said.

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