Transaction tax

ENVIVA INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

On December 31, 2021, Enviva Partners, LP (the "Partnership") converted from a
Delaware limited partnership to a Delaware corporation (the "Conversion") named
"Enviva Inc." References to "Enviva," the "Company," "we," "us," or "our" refer
to (i) Enviva Inc. and its subsidiaries for the periods following the Conversion
and (ii) the Partnership and its subsidiaries for periods prior to the
Conversion, except where the context otherwise requires. References to common
units for periods prior to the Conversion refer to common units of the
Partnership, and references to common stock for periods following the Conversion
refer to shares of common stock of Enviva Inc. As a result of the Conversion,
the primary financial impact to the consolidated financial statements contained
herein consisted of (i) reclassification of partnership capital accounts to
equity accounts reflective of a corporation and (ii) income tax effects.

References to "our former sponsor" or "Holdings" refer to Enviva Holdings, LP,
and, where applicable, its formerly wholly owned subsidiaries Enviva MLP
Holdco, LLC and Enviva Development Holdings, LLC. References to "our former GP"
refer to Enviva Partners GP, LLC, formerly a wholly owned subsidiary of
Holdings.

The following discussion and analysis should be read in conjunction with
Management's Discussion and Analysis in Part II, Item 7 of our Annual Report on
Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K") as filed
with the U.S. Securities and Exchange Commission (the "SEC"). Our 2021 Form 10-K
contains a discussion of other matters not included herein, such as disclosures
regarding critical accounting policies and estimates. You should also read the
following discussion and analysis together with the risk factors set forth in
the 2021 Form 10-K, Item 1A. "Risk Factors" and the factors described under
"Cautionary Statement Regarding Forward-Looking Information" and Item 1A. "Risk
Factors" in this Quarterly Report on Form 10-Q for information regarding certain
risks inherent in our business.

presentation basis

The following discussion about matters affecting the financial condition and
results of operations of the Company should be read in conjunction with the
unaudited condensed consolidated financial statements and notes thereto included
in this report and the audited consolidated financial statements and related
notes that are included in the 2021 Form 10-K. Among other things, those
financial statements and the related notes include more detailed information
regarding the basis of presentation for the following information.

Conversion to C corporation

We converted from a Delaware limited partnership to a Delaware corporation
effective December 31, 2021; consequently, results for periods prior to December
31, 2021 reflect Enviva as a limited partnership, not a corporation. The primary
financial impacts of the Conversion to the consolidated financial statements
were (i) reclassification of partnership capital accounts to equity accounts
reflective of a corporation and (ii) income tax effects. On the date of the
Conversion, each common unit representing a limited partner interest in the
Partnership issued and outstanding immediately prior to the Conversion was
exchanged for one share of common stock of the Company, par value $0.001 per
share.

Simplification Transaction

On October 14, 2021, the Partnership acquired our former sponsor and our former
GP, and the incentive distribution rights held by our former sponsor were
cancelled and eliminated (collectively, the "Simplification Transaction") in
exchange for 16.0 million common units, which were distributed to the owners of
our former sponsor. In connection with the Simplification Transaction, we
acquired certain assets under development, as well as off-take contracts in
varying stages of negotiation. Additionally, our existing management services
fee waivers (the "MSA Fee Waivers") and other support agreements with our former
sponsor were consolidated, fixed, and novated to certain owners of our former
sponsor. Under the consolidated support agreement, we are entitled to receive
quarterly payments (the "Support Payments") in an aggregate amount of $55.5
million with respect to periods from the fourth quarter of 2021 through the
first quarter of 2024. The consolidated financial statements have been
retroactively recast to reflect the Simplification Transaction as if the
Simplification Transaction occurred on March 18, 2010, the date on which
Holdings was originally organized, instead of October 14, 2021, the closing date
of the Simplification Transaction.

Company Overview

We develop, construct, acquire, and own and operate, fully contracted wood
pellet production plants where we aggregate a natural resource, wood fiber, and
process it into dry, densified, uniform pellets that can be effectively stored
and transported around the world. We primarily sell our wood pellets through
long-term, take-or-pay off-take contracts with creditworthy customers in the
United Kingdom, the European Union, and Japan, who use our pellets to displace
coal and other fossil fuels in their power and heat generation as part of their
efforts to transition from those conventional energy sources. Increasingly, our

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customers are also using our pellets as raw material inputs in hard-to-abate
sectors like steel, cement, lime, chemicals, and aviation fuels. Collectively,
the wood pellets we produce are viewed by our customers as a critical component
of their efforts to reduce life-cycle greenhouse gas emissions in their core
energy generation or industrial manufacturing processes.

We own and operate ten plants (collectively, "our plants") with a combined
production capacity of approximately 6.2 million metric tons ("MT") of wood
pellets per year ("MTPY") in Virginia, North Carolina, South Carolina, Georgia,
Florida, and Mississippi, the production of which is fully contracted, with many
of our contracts extending well into the 2040s. We export our wood pellets to
global markets through our deep-water marine terminal at the Port of Chesapeake,
Virginia, terminal assets at the Port of Wilmington, North Carolina and the Port
of Pascagoula, Mississippi, and from third-party deep-water marine terminals in
Savannah, Georgia, Mobile, Alabama, and Panama City, Florida. In July 2022, we
commenced construction of our fully contracted wood pellet production plant in
Epes, Alabama (the "Epes plant"). All of our facilities are located in
geographic regions with low input costs and favorable transportation logistics.
Owning these cost-advantaged assets in a rapidly expanding industry provides us
with a platform to generate stable and growing cash flows. Our plants are sited
in robust fiber baskets providing stable pricing for the low-grade fiber used to
produce wood pellets. Our raw materials are byproducts of traditional timber
harvesting, principally low-value wood materials, such as trees generally not
suited for sawmilling or other manufactured forest products, and tree tops and
limbs, understory, brush, and slash that are generated in a harvest.

Our sales strategy is to fully contract the wood pellet production from our
plants under long-term, take-or-pay off-take contracts with a diversified and
creditworthy customer base. Our long-term off-take contracts typically provide
for fixed-price deliveries that often include provisions that escalate the price
over time and provide for other margin protection. For 2022, our production
capacity from our wood pellet production plants is contracted under our existing
long-term, take-or-pay off-take contracts.

Our largest customers use our wood pellets as a substitute fuel for coal in
dedicated biomass or co-fired coal power plants. Wood pellets serve as a
suitable "drop-in" alternative to coal because of their comparable heat content,
density, and form. Due to the uninterruptible nature of our customers' fuel
consumption, our customers require a reliable supply of wood pellets that meet
stringent product specifications. We have built our operations and assets to
deliver and certify the highest levels of product quality and our proven track
record of reliable deliveries enables us to charge premium prices for this
certainty. In addition to our customers' focus on the reliability of supply,
they are concerned about the combustion efficiency of the wood pellets and their
safe handling. Because combustion efficiency is a function of energy density,
particle size distribution, ash/inert content, and moisture, our customers
require that we supply wood pellets meeting minimum criteria for a variety of
specifications and, in some cases, provide incentives for exceeding our contract
specifications.

Recent Developments

Product sales backlog

Our volumes under our firm and contingent long-term, take-or-pay off-take
contracts provide for a product sales backlog of $21.1 billion and have a total
weighted-average remaining term of 14.1 years from October 1, 2022. This amount
includes forward prices related to variable consideration including inflation,
foreign currency, and commodity prices. Also, this amount includes the effects
of the related foreign currency derivative contracts.

Tax Exempt Epes Green Bonds

In July 2022, the Industrial Development Authority of Sumter County, Alabama
issued its Epes Tax-Exempt Green Bonds in the aggregate principal amount of
$250.0 million. The proceeds of the offering were loaned to us pursuant to a
Loan and Guaranty Agreement constituting a senior unsecured obligation to fund a
portion of the costs of the acquisition, construction, equipping, and financing
of the Epes plant and to pay costs of the offering. The Epes Tax-Exempt Green
Bonds, which were issued at par, bear interest at an annual rate of 6.00%, and
mature in 2052, with the option for holders to redeem at par in 2032.

Fundraising activities

In June 2022we amended our senior secured revolving credit facility to extend the maturity date of April 2026 at June 2027and increase the maximum total leverage ratio from 5.00:1.00 to 5.50:1.00 (and from 5.25:1.00 to 5.75:1.00 during a large trading period ).

New Market Tax Credits (“NMTC”)

In June 2022, we borrowed $42.0 million where the net proceeds are generally
restricted to funding a portion of the costs of the acquisition, construction,
equipping, and financing of the Epes plant. The NMTC financing accrues interest
at a weighted

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average rate of 2.9% per year. Of the $42.0 million, $34.1 million matures in its entirety in June 2029while $7.9 million could be prepaid quarterly from 2029 until 2052.

Issue of common shares

In January 2022, we issued 4,945,000 shares of common stock at a price of $70.00
per share for total net proceeds of $332.8 million, after deducting $13.4
million of issuance costs. We intend to use the net proceeds of $332.8 million
to fund a portion of our capital expenditures related to ongoing development
projects.

Hurricane Ian

In September and October 2022, Hurricane Ian made landfall on the east coast of
the United States, affecting a number of Enviva's storage and terminaling
operations. Enviva prepared in advance of Hurricane Ian to keep employees safe
and minimize disruption, most notably at Enviva's storage and terminaling
operations located at the ports of Savannah, Georgia, Wilmington, North
Carolina, and Chesapeake, Virginia. As a precaution, the Georgia Ports Authority
and the North Carolina State Ports Authority ordered the temporary closure of
the Port of Savannah and Port of Wilmington, respectively, which suspended
operations at our deep-water marine terminals in those locations. The ports have
re-opened and Enviva has resumed normal operations. No production facilities
were adversely affected by the storm. Impact to operations was minimal and all
employees were confirmed safe.

Factors affecting the comparability of our financial results

Omicron variant of the novel coronavirus

During the three months ended March 31, 2022, the Omicron variant of COVID-19
significantly impacted our operations and resulted in $15.2 million of
incremental costs. Our contractors and supply chain partners experienced
labor-related and other challenges associated with COVID-19 that had a more
pronounced than anticipated impact on our operations and project execution
schedule. In addition, the prevalence of the Omicron variant of COVID-19 and
increased rates of infection across areas in which we operate affected the
availability of healthy workers from time to time at our facilities and we
experienced increased rates of absence in our hourly workforce as workers who
contracted COVID-19 quarantined at home. These absences contributed to reduced
facility availability and, in some cases, reduced aggregate production levels.
For more information about the effects of COVID-19 on the nine months ended
September 30, 2022, please see below under "Results of Operations."

How we evaluate our operations

Adjusted net profit (loss)

We define adjusted net income (loss) as net income (loss) excluding acquisition
and integration costs and other, early retirement of debt obligation, effects of
COVID-19 and the war in Ukraine, and Support Payments. We believe that adjusted
net income (loss) enhances investors' ability to compare the past financial
performance of our underlying operations with our current performance separate
from certain items of gain or loss that we characterize as unrepresentative of
our ongoing operations.

Adjusted gross margin and adjusted gross margin per metric ton

We define adjusted gross margin as gross margin excluding loss on disposal of
assets, equity-based compensation and other expense, depreciation and
amortization, changes in unrealized derivative instruments related to hedged
items, acquisition and integration costs and other, effects of COVID-19 and the
war in Ukraine, and Support Payments. We define adjusted gross margin per metric
ton as adjusted gross margin per metric ton of wood pellets sold. We believe
adjusted gross margin and adjusted gross margin per metric ton are meaningful
measures because they compare our revenue-generating activities to our cost of
goods sold for a view of profitability and performance on a total-dollar and a
per-metric ton basis. Adjusted gross margin and adjusted gross margin per metric
ton primarily will be affected by our ability to meet targeted production
volumes and to control direct and indirect costs associated with procurement and
delivery of wood fiber to our wood pellet production plants and our production
and distribution of wood pellets.

Adjusted EBITDA

We define adjusted EBITDA as net income (loss) excluding depreciation and
amortization, interest expense, income tax expense (benefit), early retirement
of debt obligation, equity-based compensation and other expense, loss on
disposal of assets, changes in unrealized derivative instruments related to
hedged items, acquisition and integration costs and other, effects of COVID-19
and the war in Ukraine, and MSA Fee Waivers and Support Payments. Adjusted
EBITDA is a supplemental

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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 cash income tax
expenses, interest expense net of amortization of debt issuance costs, debt
premium, and original issue discounts, and maintenance capital expenditures. We
use distributable cash flow as a performance metric to compare our
cash-generating performance from period to period and to compare the
cash-generating performance for specific periods to the cash dividends (if any)
that are expected to be paid to our shareholders. We do not rely on
distributable cash flow as a liquidity measure.

Unrevised presentation 2021

The three and nine months ended September 30, 2021 were calculated on a recast
basis in accordance with accounting principles generally accepted in the United
States ("GAAP") to reflect the consolidated performance of Enviva and our former
sponsor as if Enviva had bought the former sponsor at inception instead of
October 14, 2021, the closing date of the Simplification Transaction. In
addition, we are also presenting results for the three and nine months ended
September 30, 2021, calculated on a non-GAAP basis that combines (i) the actual
performance of Enviva for the three and nine months ended September 30, 2021 on
a non-recast basis, and (ii) our consolidated performance, calculated on a
recast basis in accordance with GAAP, inclusive of the assets and operations
acquired as part of the Simplification Transaction, for the three and nine
months ended September 30, 2021 (the "Non-Recast Presentation"). We believe the
Non-Recast Presentation provides investors with relevant information to evaluate
our financial and operating performance because it reflects Enviva's actual and
historically reported performance on a stand-alone basis and on a consolidated
basis for the three and nine months ended September 30, 2021.

The unrestated presentation does not reflect the restatement of our historical results required under GAAP as a result of the simplification transaction and therefore contains non-GAAP measures. Unless expressly stated otherwise, all results are presented on a restated basis.

Limitations of Non-GAAP Financial Measures

Adjusted net income (loss), adjusted gross margin, adjusted gross margin per
metric ton, adjusted EBITDA, and distributable cash flow, as well as our
Non-Recast Presentation, are not financial measures presented in accordance with
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 net income (loss), adjusted gross margin, adjusted gross margin per
metric ton, adjusted EBITDA, or distributable cash flow, or our Non-Recast
Presentation, in isolation or as substitutes for analysis of our results as
reported in accordance with GAAP.

Our definitions of these non-GAAP financial measures may not be comparable to
similarly titled measures of other companies, thereby diminishing their utility.
Please see above for a reconciliation of the Non-Recast Presentation to the
Recast Presentation and below for a reconciliation of each of adjusted net
income (loss), adjusted gross margin and adjusted gross margin per metric ton,
adjusted EBITDA, and distributable cash flow to the most directly comparable
GAAP financial measure.

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Operating results

Three Months Ended September 30, 2022 Compared to Three Months Ended September
30, 2021

                                                        Three Months Ended September 30,
                                                          2022              2021 (Recast)            Change
                                                                           (in thousands)
Product sales                                        $   322,978          $      229,698          $   93,280
Other revenue                                              2,682                   8,128              (5,446)
Net revenue                                              325,660                 237,826              87,834
Cost of goods sold, excluding items below                257,542                 199,943              57,599
Loss on disposal of assets                                 4,035                   3,916                 119
Selling, general, administrative, and development
expenses                                                  30,407                  33,898              (3,491)
Depreciation and amortization                             34,930                  23,285              11,645
Total operating costs and expenses                       326,914                 261,042              65,872
Loss from operations                                      (1,254)                (23,216)             21,962
Interest expense                                         (18,704)                (15,463)             (3,241)

Other income (expense), net                                1,671                     (37)              1,708
Net loss before income tax expense (benefit)             (18,287)                (38,716)             20,429
Income tax expense (benefit)                                  12                  (2,893)              2,905
Net loss                                             $   (18,299)         $      (35,823)         $   17,524


Net revenue

Revenue related to product sales for wood pellets produced or procured by us
increased to $323.0 million in the three months ended September 30, 2022 from
$229.7 million in the three months ended September 30, 2021. The $93.3 million,
or 41%, increase was primarily attributable to a 31% increase in average sale
price per MT and a 7% increase in product sales volumes for the three months
ended September 30, 2022 as compared to the three months ended September 30,
2021.

The increase in average sales price per MT was primarily due to addressing
dislocations in our customers' and other producers' supply chains, which enabled
incremental deliveries at elevated spot pricing, pricing escalators and cost
pass-through mechanisms inclusive of bunker fuel adjustments in our existing
contracts, and repricing existing contracts and entering into new contracts at
higher prices compared to historical prices. Recent biomass spot market prices,
as well as the forward curve pricing of certain European indices, have exceeded
$400 per MT, representing a substantial premium to the current long-term
contracted pricing of roughly $200 to $220 per MT across Enviva's weighted
average portfolio, and we have been able to capture some of that differential
during the three months ended September 30, 2022.

The increase in product sales volumes was 84 thousand MT. Product sales volumes
were dampened by the timing of shipments that has resulted in an increase in
finished goods inventory due to Hurricane Ian and decreased volumes procured
from third parties to fulfill product sales during the three months ended
September 30, 2022 as compared to the three months ended September 30, 2021. As
of September 30, 2022, due to Hurricane Ian we had three shipments with
approximately 80 thousand MT that were delayed due to the temporary suspension
of port operations and were sold in the subsequent quarter. The decrease in
procured volumes was due to a lower availability of third-party pellets
resulting from the war in Ukraine and related sanctions.

Other revenue for the three months ended September 30, 2022 and 2021 was $2.7
million and $8.1 million, respectively, and included none and $7.2 million,
respectively, in payments to us for adjusting deliveries under our take-or-pay
off-take contracts, which otherwise would have been included in product sales
and which was recognized under a breakage model based on when the pellets would
have been loaded.

Cost of goods sold

Cost of goods sold increased to $257.5 million for the three months ended
September 30, 2022 from $199.9 million for the three months ended September 30,
2021, an increase of $57.6 million, or 29%. The increase in cost of goods sold
was primarily a result of incremental fiber procurement and energy costs
inclusive of bunker fuel adjustments. In addition, we incurred incremental cost
of goods sold from the on-going ramp of our tenth plant in Lucedale, Mississippi
(the "Lucedale plant") and

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the start of operations Enviva new deep water marine terminal at
Pascagoula, Mississippi (there “Pascagoula Terminal”).

Adjusted gross margin and adjusted gross margin per metric ton

                                                                  Three 

Months ended September 30,

                                                                    2022                        2021 (Recast)            Change
                                                                         (in thousands, except per metric ton)
Reconciliation of gross margin to adjusted gross
margin and adjusted gross margin per metric ton:
Gross margin(1)                                      $         31,750                         $       12,483          $   19,267
Loss on disposal of assets                                      3,517                                  3,906                (389)
Equity-based compensation and other expense                       567                                    567                   -
Depreciation and amortization                                  32,849                                 21,495              11,354
Changes in unrealized derivative instruments                      710                                 (4,364)              5,074
Acquisition and integration costs and other                        58                                    325                (267)
Support Payments                                                5,900                                      -               5,900
Adjusted gross margin                                $         75,351                         $       34,412          $   40,939
Metric tons sold                                                1,256                                  1,172                  84
Adjusted gross margin per metric ton                 $          59.99                         $        29.36          $    30.63


(1)Gross margin is defined as net sales less cost of goods sold (including related depreciation and amortization and loss on disposal of assets).

We earned adjusted gross margin of $75.4 million, or $59.99 per MT, for the
three months ended September 30, 2022 compared to $34.4 million, or $29.36 per
MT, for the three months ended September 30, 2021. The increase in adjusted
gross margin was primarily due to the aforementioned increase in net revenue, as
well as due to the increase in Support Payments for the three months ended
September 30, 2022 as compared to the three months ended September 30, 2021,
partially offset by the aforementioned increase in cost of goods sold.

Selling, general, administrative and development expenses

Selling, general, administrative, and development expenses were $30.4 million
and $33.9 million for the three months ended September 30, 2022 and 2021,
respectively. Selling, general, administrative, and development expenses include
costs to develop new markets, corporate and other overhead expenses, and costs
of developing new plants or ports (for those that have not yet met the
capitalization threshold or costs that are not eligible for capitalization).
Once a significant component of the plant or port is placed in-service, the
associated expense component is classified as cost of goods sold. The $3.5
million decrease in total selling, general, administrative, and development
expenses is primarily associated with a decrease in consulting and management
fee expenses primarily due to the elimination of activities resulting from the
Simplification Transaction.

Depreciation and amortization

Depreciation and amortization expense were $34.9 million and $23.3 million for
the three months ended September 30, 2022 and 2021, respectively, primarily due
to the Lucedale plant, Pascagoula terminal, and expansion assets placed in
service during 2022.

Interest expense

We incurred $18.7 million and $15.5 million of interest expense during the three
months ended September 30, 2022 and 2021, respectively. The increase in interest
expense from the prior year was primarily attributable to a higher outstanding
borrowing amount and higher interest rate under our senior secured revolving
credit facility, offset by the extinguishment of the senior secured green term
loan facility as part of the Simplification Transaction.

Income tax

We recorded a negligible income tax expense and $2.9 million tax benefit for the three months ended September 30, 2022 and 2021, respectively.

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Adjusted net loss

                                                        Three Months Ended September 30,
                                                          2022              2021 (Recast)            Change
                                                                           (in thousands)
Reconciliation of net loss to adjusted net loss:
Net loss                                             $   (18,299)         $      (35,823)         $   17,524
Acquisition and integration costs and other                4,409                   7,320              (2,911)
Support Payments                                           5,900                       -               5,900
Adjusted net loss                                    $    (7,990)         $      (28,503)         $   20,513


Adjusted EBITDA
                                                        Three Months Ended September 30,
                                                          2022              2021 (Recast)            Change
                                                                           (in thousands)
Reconciliation of net loss to adjusted EBITDA:
Net loss                                             $   (18,299)         $      (35,823)         $   17,524
Add:
Depreciation and amortization                             34,930                  23,285              11,645
Interest expense                                          18,704                  15,463               3,241
Income tax expense (benefit)                                  12                  (2,893)              2,905
Equity-based compensation and other expense               10,199                   7,267               2,932
Loss on disposal of assets                                 4,035                   3,916                 119
Changes in unrealized derivative instruments                 710                  (4,364)              5,074
Acquisition and integration costs and other                4,409                   7,319              (2,910)
Support Payments                                           5,900                       -               5,900
Adjusted EBITDA                                      $    60,600          $       14,170          $   46,430


We generated adjusted EBITDA of $60.6 million for the three months ended
September 30, 2022 compared to $14.2 million for the three months ended
September 30, 2021. The $46.4 million increase was primarily attributable to the
factors described above under the headings "Adjusted gross margin and adjusted
gross margin per metric ton" and "Selling, general, administrative, and
development expenses."

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Distributable cash

The following is a reconciliation of adjusted EBITDA to distributable cash flow:
                                                          Three Months Ended September 30,
                                                            2022                 2021 (Recast)            Change
                                                                             (in thousands)
Reconciliation of adjusted EBITDA to distributable
cash flow attributable to Enviva:
Adjusted EBITDA                                      $         60,600          $       14,170          $   46,430
Less:
Interest expense, net of amortization of debt
issuance costs, debt premium, and original issue
discount                                                       17,908                  14,397               3,511
Maintenance capital expenditures                                6,344                   3,339               3,005

Distributable cash flow attributable to Enviva Inc.
Where Enviva Partners, LP sponsors

              $         36,348       

$(3,566) $39,914

The following table provides a reconciliation of net income (loss) to adjusted EBITDA and distributable cash flow for the three months ended September 30, 2021on a recast and unrecast basis:

                                                               Three Months 

Ended September 30, 2021

                                                         Recast               Adjustments           Non-Recast
                                                                           (in millions)
Net (loss) income                                   $        (35.8)         $       35.7          $      (0.1)
Add:
Depreciation and amortization                                 23.3                  (1.3)                22.0
Interest expense                                              15.5                  (4.8)                10.7
Income tax (benefit) expense                                  (2.9)                  2.9                    -
Equity-based compensation and other expense                    7.3                  (4.9)                 2.4
Loss on disposal of assets                                     3.9                     -                  3.9
Changes in unrealized derivative instruments                  (4.4)                    -                 (4.4)
Acquisition and integration costs and other                    7.3                     -                  7.3
MSA Fee Waivers                                                  -                  21.1                 21.1
Adjusted EBITDA                                               14.2                  48.7                 62.9
Less:
Interest expense, net of amortization of debt
issuance costs, debt premium, and original issue
discount                                                      14.4                  (4.4)                10.0
Maintenance capital expenditures                               3.4                     -                  3.4
Distributable cash flow                             $         (3.6)         $       53.1          $      49.5


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The following is a reconciliation of net (loss) income to adjusted EBITDA and
distributable cash flow for the three months ended September 30, 2022 and the
three months ended September 30, 2021 on a non-recast basis:

                                                     Three Months Ended September 30,
                                                         2022                 2021               Change
                                                                         (in millions)
Net (loss) income                                   $      (18.3)         $     (0.1)         $    (18.2)
Add:
Depreciation and amortization                               34.9                22.0                12.9
Interest expense                                            18.7                10.7                 8.0
Equity-based compensation and other expense                 10.2                 2.4                 7.8
Loss on disposal of assets                                   4.1                 3.9                 0.2
Changes in unrealized derivative instruments                 0.7                (4.4)                5.1
Acquisition and integration costs and other                  4.4                 7.3                (2.9)
Support Payments and MSA Fee Waivers                         5.9                21.1               (15.2)

Adjusted EBITDA                                             60.6                62.9                (2.3)
Less:
Interest expense, net of amortization of debt
issuance costs, debt premium, and original issue
discount                                                    17.9                10.0                 7.9
Maintenance capital expenditures                             6.4                 3.4                 3.0
Distributable cash flow                             $       36.3          $     49.5          $    (13.2)


Results of Operations

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30,
2021

                                                           Nine Months Ended September 30,
                                                            2022                 2021 (Recast)            Change
                                                                             (in thousands)
Product sales                                        $        847,505          $      725,470          $  122,035
Other revenue                                                   7,458                  39,940             (32,482)
Net revenue                                                   854,963                 765,410              89,553
Cost of goods sold, excluding items below                     718,854                 632,209              86,645
Loss on disposal of assets                                      7,218                   7,261                 (43)
Selling, general, administrative, and development
expenses                                                       91,802                  99,788              (7,986)
Depreciation and amortization                                  86,322                  67,985              18,337
Total operating costs and expenses                            904,196                 807,243              96,953
Loss from operations                                          (49,233)                (41,833)             (7,400)
Interest expense                                              (42,633)                (46,321)              3,688

Other income, net                                                 944                     471                 473
Net loss before income tax expense (benefit)                  (90,922)                (87,683)             (3,239)
Income tax expense (benefit)                                       26                  (3,834)              3,860
Net loss                                             $        (90,948)         $      (83,849)         $   (7,099)


Net revenue

Revenue related to product sales for wood pellets produced or procured by us
increased to $847.5 million in the nine months ended September 30, 2022 from
$725.5 million in the nine months ended September 30, 2021. The $122.0 million,
or 17%, increase was primarily attributable to a 19% increase in average sale
price per MT, partially offset by a 2% decrease in product sales volumes for the
nine months ended September 30, 2022 as compared to the nine months ended
September 30, 2021.

The increase in average sales price per MT was primarily due to addressing
dislocations in our customers' and other producers' supply chains, which enabled
incremental deliveries at elevated spot pricing, pricing escalators and cost
pass-

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through mechanisms inclusive of bunker fuel adjustments in our existing
contracts, and repricing existing contracts and entering into new contracts at
higher prices compared to historical prices. Recent biomass spot market prices,
as well as the forward curve pricing of certain European indices, have exceeded
$400 per MT, representing a substantial premium to the current long-term
contracted pricing of roughly $200 to $220 per MT across Enviva's weighted
average portfolio, and we have been able to capture some of that differential
during the nine months ended September 30, 2022.

The decrease in product sales volumes was 61 thousand MT. Product sales volumes
were dampened by the timing of shipments that has resulted in an increase in
finished goods inventory due to Hurricane Ian and decreased volumes procured
from third parties to fulfill product sales during the nine months ended
September 30, 2022 compared to the nine months ended September 30, 2021. As of
September 30, 2022, due to Hurricane Ian we had three shipments with
approximately 80 thousand MT that were delayed due to the temporary suspension
of port operations and were sold in the subsequent quarter. The decrease in
procured volumes was due to a lower availability of third-party pellets
resulting from the war in Ukraine and related sanctions. For the three months
ended March 31, 2022, product sales revenue from produced volumes were dampened
as a result of labor-related and other challenges associated with COVID-19
experienced by our employees, contractors, and supply chain partners that, in
some cases, resulted in curtailment of our operations that had a more pronounced
than anticipated impact on our operations and project execution.

Other revenue for the nine months ended September 30, 2022 and 2021 included
$2.2 million and $35.6 million, respectively, in payments to us for adjusting
deliveries under our take-or-pay off-take contracts, which otherwise would have
been included in product sales and which was recognized under a breakage model
based on when the pellets would have been loaded.

Cost of Goods Sold

Cost of goods sold increased to $718.9 million for the nine months ended
September 30, 2022 from $632.2 million for the nine months ended September 30,
2021, an increase of $86.6 million, or 14%. The increase in cost of goods sold
was primarily a result of incremental fiber logistics, energy, and wood pellet
distribution costs inclusive of bunker fuel adjustments. In particular, during
the three months ended March 31, 2022, we experienced labor-related and other
challenges associated with COVID-19 with our employees, contractors and supply
chain partners that had a more pronounced than anticipated impact on our
operations and project execution. Furthermore, we incurred incremental cost of
goods sold from the on-going ramp of the Lucedale plant and the commencement of
operations of the Pascagoula terminal.

Adjusted gross margin and adjusted gross margin per metric ton

                                                                 Nine 

Months ended September 30,

                                                                  2022                       2021 (Recast)            Change
                                                                        (in thousands, except per metric ton)
Reconciliation of gross margin to adjusted gross
margin and adjusted gross margin per metric ton:
Gross margin(1)                                      $         48,305                      $       62,127          $  (13,822)
Loss on disposal of assets                                      6,700                               7,251                (551)
Equity-based compensation and other expense                     1,868                               1,703                 165
Depreciation and amortization                                  81,103                              63,823              17,280
Changes in unrealized derivative instruments                    1,245                              (3,566)              4,811
Acquisition and integration costs and other                     2,615                                 397               2,218
Effects of COVID-19                                            13,942                                   -              13,942
Effects of the war in Ukraine                                   5,051                                   -               5,051
Support Payments                                               19,985                                   -              19,985
Adjusted gross margin                                $        180,814                      $      131,735          $   49,079
Metric tons sold                                                3,627                               3,688                 (61)
Adjusted gross margin per metric ton                 $          49.85                      $        35.72          $    14.13


(1)Gross margin is defined as net sales less cost of goods sold (including related depreciation and amortization and loss on disposal of assets).

We earned adjusted gross margin of $180.8 million, or $49.85 per MT, for the
nine months ended September 30, 2022 compared to $131.7 million, or $35.72 per
MT, for the nine months ended September 30, 2021. The increase in adjusted gross

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The margin was primarily due to the aforementioned increase in net revenues and increased support payments partially offset by additional fiber logistics, energy and wood pellet distribution costs.

The Omicron variant of COVID-19 has had a significant impact on our operations and has resulted in $13.9 million incremental costs during the nine months ended
September 30, 2022all of which were incurred during the three months ended
March 31, 2022.

•The impact on our supply chain logistics within our fiber supply base as well
as our truck and rail service providers was more pronounced than anticipated.
Our third-party service providers' failure to perform resulted in unprecedented
incremental costs to procure raw materials and produce and deliver our wood
pellets to customers.

•We incurred additional costs related to increased employee overtime and a large contract workforce to partially offset plant employee absenteeism.

•We incurred additional costs related to securing short-term equipment rentals due to late delivery of acquired equipment to ensure business continuity.

The war in Ukraine had an impact on our operations and resulted in $5.1 million incremental costs during the nine months ended September 30, 2022all of which were incurred during the three months ended March 31, 2022.

• Severe dislocations within the operations of our third-party shipping partners resulted in additional distribution costs related to demurrage and the loading, transport and unloading of our wood pellets.

•The immediate spike in energy prices negatively impacted the cost of our operations, including additional costs to support the continued services of our third-party fiber and trucking service providers.

Due to the increased average sales price per MT and the reduction in sales
volumes as described above and after excluding the aforementioned incremental
fiber logistics, energy, and wood pellet distribution costs, adjusted gross
margin increased during the nine months ended September 30, 2022 compared to the
nine months ended September 30, 2021.

Selling, general, administrative and development expenses

Selling, general, administrative, and development expenses were $91.8 million
and $99.8 million for the nine months ended September 30, 2022 and 2021,
respectively. Selling, general, administrative, and development expenses include
costs to develop new markets, corporate and other overhead expenses, and costs
of developing new plants or ports (for those that have not yet met the
capitalization threshold or costs that are not eligible for capitalization).
Once a significant component of the plant or port is placed in-service, the
associated expense component is classified as cost of goods sold. The $8.0
million decrease in total selling, general, administrative, and development
expenses is primarily associated with a decrease in consulting and management
fee expenses and due to the elimination of activities resulting from the
Simplification Transaction.

Depreciation and amortization

Depreciation and amortization expense were $86.3 million and $68.0 million for
the nine months ended September 30, 2022 and 2021, respectively, primarily due
to the Lucedale plant, Pascagoula terminal, and expansion assets placed in
service.

Interest expense

We incurred $42.6 million and $46.3 million of interest expense during the nine
months ended September 30, 2022 and 2021, respectively. The decrease in interest
expense from the prior year was primarily attributable to the extinguishment of
the senior secured green term loan facility as part of the Simplification
Transaction, partially offset by a higher outstanding borrowing amount and
higher interest rate on our senior secured revolving credit facility.

Income tax

We recorded a negligible tax expense for the nine months ended
September 30, 2022 and $3.8 million of the tax benefit during the nine months ended September 30, 2021.

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Adjusted net loss

                                                           Nine Months Ended September 30,
                                                            2022                 2021 (Recast)            Change
                                                                             (in thousands)
Reconciliation of net loss to adjusted net loss:
Net loss                                             $        (90,948)         $      (83,849)         $   (7,099)
Acquisition and integration costs and other                    18,778                   8,815               9,963
Effects of COVID-19                                            15,189                       -              15,189
Effects of the war in Ukraine                                   5,051                       -               5,051
Support Payments                                               19,985                       -              19,985
Adjusted net loss                                    $        (31,945)         $      (75,034)         $   43,089


Adjusted EBITDA

                                                           Nine Months Ended September 30,
                                                            2022                 2021 (Recast)            Change
                                                                             (in thousands)
Reconciliation of net loss to adjusted EBITDA:
Net loss                                             $        (90,948)         $      (83,849)         $   (7,099)
Add:
Depreciation and amortization                                  86,322                  67,985              18,337
Interest expense                                               42,633                  46,321              (3,688)
Income tax expense (benefit)                                       26                  (3,834)              3,860
Equity-based compensation and other expense                    31,116                  22,459               8,657
Loss on disposal of assets                                      7,218                   7,261                 (43)
Changes in unrealized derivative instruments                    1,245                  (3,566)              4,811
Acquisition and integration costs and other                    18,778                   8,814               9,964
Effects of COVID-19                                            15,189                       -              15,189
Effects of the war in Ukraine                                   5,051                       -               5,051
Support Payments                                               19,985                       -              19,985
Adjusted EBITDA                                      $        136,615          $       61,591          $   75,024


We generated adjusted EBITDA of $136.6 million for the nine months ended
September 30, 2022 compared to $61.6 million for the nine months ended September
30, 2021. The $75.0 million increase was primarily attributable to the factors
described above under the headings "Adjusted gross margin and adjusted gross
margin per metric ton" and "Selling, general, administrative, and development
expenses."

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Distributable cash

The following is a reconciliation of adjusted EBITDA to distributable cash flow:

                                                           Nine Months Ended September 30,
                                                            2022              2021 (Recast)            Change
                                                                             (in thousands)
Reconciliation of adjusted EBITDA to distributable cash
flow attributable to Enviva:
Adjusted EBITDA                                         $  136,615          $       61,591          $  75,024
Less:
Interest expense, net of amortization of debt issuance
costs, debt premium, and original issue discount            40,578                  43,107             (2,529)
Maintenance capital expenditures                            13,026                  11,183              1,843

Distributable cash flow attributable to Enviva Inc. 83,011

          7,301             75,710

Less: distributable cash flow attributable to incentive distribution rights

                                              -                  19,030            (19,030)

Distributable cash flow attributable to Enviva Inc. Where
Enviva Partners, LP sponsors

                    $   83,011          

($11,729) $94,740


The following table presents a reconciliation of net (loss) income to adjusted
EBITDA and distributable cash flow for the nine months ended September 30, 2021,
on a recast basis and non-recast basis:

                                                               Nine Months 

Ended September 30, 2021

                                                         Recast              Adjustments           Non-Recast
                                                                           (in millions)
Net (loss) income                                   $       (83.8)         $       84.9          $       1.1
Add:
Depreciation and amortization                                68.0                  (2.8)                65.2
Interest expense                                             46.3                 (10.4)                35.9
Income tax (benefit) expense                                 (3.8)                  3.7                 (0.1)

Equity-based compensation and other expense                  22.4                 (14.6)                 7.8
Loss on disposal of assets                                    7.3                     -                  7.3
Changes in unrealized derivative instruments                 (3.6)                    -                 (3.6)
Acquisition and integration costs and other                   8.8                  (0.5)                 8.3

MSA Fee Waivers                                                 -                  36.2                 36.2
Adjusted EBITDA                                              61.6                  96.5                158.1
Less:
Interest expense, net of amortization of debt
issuance costs, debt premium, and original issue
discount                                                     43.1                  (9.1)                34.0
Maintenance capital expenditures                             11.2                     -                 11.2
Distributable cash flow                             $         7.3          $      105.6          $     112.9


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The following is a reconciliation of net (loss) income to adjusted EBITDA and
distributable cash flow for the nine months ended September 30, 2022 and the
nine months ended September 30, 2021 on a non-recast basis:
                                                        Nine Months Ended September 30,
                                                            2022                   2021               Change
                                                                           (in millions)
Net (loss) income                                   $           (90.9)         $      1.1          $    (92.0)
Add:
Depreciation and amortization                                    86.3                65.2                21.1
Interest expense                                                 42.6                35.9                 6.7
Income tax (benefit) expense                                        -                (0.1)                0.1
Equity-based compensation and other expense                      31.1                 7.8                23.3
Loss on disposal of assets                                        7.2                 7.3                (0.1)
Changes in unrealized derivative instruments                      1.2                (3.6)                4.8
Acquisition and integration costs and other                      18.8                 8.3                10.5
Effects of COVID-19                                              15.2                   -                15.2
Effects of the war in Ukraine                                     5.1                   -                 5.1
Support Payments and MSA Fee Waivers                             20.0                36.2               (16.2)
Adjusted EBITDA                                                 136.6               158.1               (21.5)

Less:

Interest expense, net of amortization of debt
issuance costs, debt premium, and original issue
discount                                                         40.6                34.0                 6.6
Maintenance capital expenditures                                 13.0                11.2                 1.8
Distributable cash flow                             $            83.0          $    112.9          $    (29.9)

Cash and capital resources

Insight

Our primary sources of liquidity include cash and cash equivalent balances, cash
generated from operations, availability under our senior secured revolving
credit facility and, from time to time, debt and equity offerings. Our primary
liquidity needs are to fund working capital, service our debt, finance
greenfield construction projects, growth initiatives, and maintenance capital
expenditures, and pay dividends. We believe cash on hand, cash generated from
our operations and the availability of our senior secured revolving credit
facility will be sufficient to meet our primary liquidity requirements. Similar
to previous years, we expect cash generated from operations for the second half
of 2022 to be significantly higher than the first half of the year due to the
predictable seasonality in our business as well as, in this case, the ramp of
production at our newest plant in Lucedale, Mississippi. However, future capital
expenditures, such as expenditures made in relation to acquisitions of plants or
terminals, plant development and/or plant expansion projects, and other cash
requirements could be higher than we currently expect as a result of various
factors. Additionally, our ability to generate sufficient cash from our
operating activities depends on our future performance, which is subject to
general economic, political, financial, competitive, and other factors beyond
our control.

Our liquidity as of September 30, 2022, which included cash on hand (including
cash generally restricted to funding a portion of the costs of the acquisition,
construction, equipping, and financing of our Epes plant) and availability under
our $570.0 million senior secured revolving credit facility, was $327.6 million.

Cash dividends

We intend to pay cash dividends to holders of our common stock of $3.62 per
common stock for 2022, except cash will not be paid on 9.0 million of the 16.0
million common units issued in connection with the Simplification Transaction
where the former owners of our former sponsor have agreed to reinvest in our
common stock all dividends paid for the period beginning with the third quarter
of 2021 through the fourth quarter of 2024.

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Capital requirements

We operate in a capital-intensive industry, which requires significant
investments to develop and construct new production and terminal facilities, and
maintain and upgrade our existing facilities. Our capital requirements primarily
have consisted, and we anticipate will continue to consist, of the following:

•Maintenance capital expenditures, which are cash expenditures incurred to
maintain our long-term operating income or operating capacity. These
expenditures typically include certain system integrity, compliance, and safety
improvements; and

•Growth capital expenditures, which are cash expenditures we expect will
increase our operating income or operating capacity over the long term. Growth
capital expenditures include acquisitions or construction of new capital assets
or capital improvements such as additions to or improvements on our existing
capital assets as well as projects intended to extend the useful life of assets.

The classification of capital expenditures as maintenance or growth is done at the individual asset level during our budgeting process and when we approve, execute and monitor our capital expenditures.

We plan to invest $255.0 million to $265.0 million in capital expenditures in
2022. Of that amount, we expect to invest (i) $210.0 million to $215.0 million
primarily on the Lucedale plant which is in the process of ramping production,
as well as the Pascagoula terminal, and the construction of the Epes plant, (ii)
$30.0 million to $35.0 million primarily on the Multi-Plant Expansions, and
(iii) $15.0 million on maintenance capital expenditures. During the nine months
ended September 30, 2022, we have invested $162.4 million in capital
expenditures.

Our current financing strategy is to finance acquisitions and construction activities with a combination of cash flow from operations and debt.

Cash flow

The following table sets forth a summary of our net cash flows from operating,
investing and financing activities for the nine months ended September 30, 2022
and 2021:

                                                                     Nine Months Ended September 30,
                                                                      2022                 2021 (Recast)
                                                                             (in thousands)
Net cash (used in) provided by operating activities            $        (52,510)         $       32,357
Net cash used in investing activities                                  (167,449)               (245,173)
Net cash provided by financing activities                               430,188                 481,169

Net increase in cash, cash equivalents and restricted cash $210,229 $268,353

Cash (used in) provided by operating activities

Net cash used in operating activities was $52.5 million and net cash provided by
operating activities was $32.4 million for the nine months ended September 30,
2022 and 2021, respectively. The $84.9 million increase in net cash used in
operating activities was primarily due to a $58.6 million increase in accounts
receivable and inventories due to the timing of shipments. This was partially
offset by an increase in cash from net loss adjusted for non-cash items of $23.6
million.

Cash used in investing activities

Net cash used in investing activities was $167.4 million and $245.2 million for
the nine months ended September 30, 2022 and 2021, respectively. The $77.7
million decrease in cash used in investing activities during the nine months
ended September 30, 2022 compared to the nine months ended September 30, 2021
was primarily due to the timing of capital expenditures at the Lucedale plant,
Pascagoula terminal, and on various expansion projects.

Cash provided by financing activities

Net cash provided by financing activities was $430.2 million and $481.2 million
for the nine months ended September 30, 2022 and 2021, respectively. The $51.0
million decrease in net cash provided by financing activities during the nine
months ended September 30, 2022 compared to the nine months ended September 30,
2021 was primarily attributable to cash used to acquire a noncontrolling
interest of $153.3 million during the nine months ended September 30, 2021, an
increase in proceeds from the issuance of common shares or units of $118.1
million, $14.0 million of support payments received during the nine

                                       36

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months ended September 30, 2022, a $12.3 million capital contribution of a New
Market Tax Credit financing transaction, partially offset by a decrease of
$259.0 million in proceeds from debt issuance net of repayment of debt, an
increase in cash dividends or distributions and equivalent rights of $86.9
million, a $6.0 million increase of tax withholding payments associated with the
settlement of restricted stock unit awards that vested pursuant to our Long-Term
Incentive Plan, and a $3.2 million increase in debt issuance costs.

Off-balance sheet arrangements

From September 30, 2022we had no off-balance sheet arrangements.

Significant Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires
management to make judgments, estimates, and assumptions that affect the amounts
reported in our unaudited condensed consolidated financial statements and
accompanying notes. Actual results could differ materially from those estimates.
We provide expanded discussion of our significant accounting policies,
estimates, and judgments in our 2021 Form 10­K. We believe these accounting
policies reflect our significant estimates and assumptions used in preparation
of our financial statements. There have been no significant changes to our
critical accounting policies and estimates since December 31, 2021.

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