Enviva (NYSE:EVA) shares crashed over 55% in pre-market Thursday after the world's largest producer of wood pellets slashed its full-year outlook and eliminated its quarterly dividend.
Enviva reported a Q1 net loss of $116.9 million, much worse than the net loss of $45.3M for the year-ago period. Revenue for the quarter of $269.1M missed the analyst target of $290.57M.
“The plans and initiatives underway to improve productivity and costs across Enviva’s current asset platform continue to fall behind expectations. While the board of directors remains convinced of management’s ability to deliver the originally forecasted operational and financial performance over time, it is clearly taking longer than expected,” said John Keppler, executive chairman of the board.
Enviva added that it plans to save about $1 billion in the 2023-2026 period by eliminating the dividend. For FY23, the company sees a net loss of $161M, a significant increase from the prior forecast of -$33M.
The adjusted Ebitda is now seen at $225M, below the previous $320M.
In response to the disappointing update, Truist analysts double-downgraded the stock to Sell from Buy with a price target of $10 per share (down from $40).
“While we continue to see the long-term market for biomass as supportive, we believe that recent downtrends in the EVA's margin profile coupled with continued production shortfalls & accounting complexities call into question longer-term ability to drive growth/returns. Further, with the elimination of the dividend & heightened margin volatility, we see shares revaluing toward commodity peers,” they wrote.