Fitch downgrades Enviva

Fitch Ratings said it downgraded Enviva Inc.'s long-term issuer default rating to B+ from BB- and trimmed its senior unsecured rating to B+/RR4 from BB-/RR4 and assigned a negative outlook.

“The downgrade and negative outlook reflect a significant reduction in Q1 and projected FY23 earnings relative to prior projections which places pressure on leverage metrics and highlights greater operating risks not reflected in current ratings. Increased operating costs and lower-than-expected production were the main drivers. As a result, management has lowered FY23 adjusted EBITDA which will result in an increase in projected FY23 FFO leverage to 6x from Fitch's previous projection of 5x,” the agency said in a press release.

Enviva recently slashed its FY23 adjusted EBITDA guidance by $95 million to $225 million at the midpoint, which is less than the about $300 million EBITDA Fitch had previously projected, the agency noted.

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