- Enviva Partners has been providing their unitholders with a high distribution yield that has also been growing each quarter.
- Sadly, they are being choked by their IDRs that now consume over 20% of their operating cash flow, thereby providing a significant problem.
- This means that their total distribution payments to common unitholders and their IDRs now exceed their operating cash flow, which is obviously very risky.
- This leaves them debt-reliant but even more concerning, their leverage is very high and has been steadily rising, thereby indicating an unsustainable operating model.
- Since this poses significant risks to their distributions that could be reduced at any moment, I believe that a bearish rating is appropriate.
For further details see:
Enviva Partners: Distribution Reduction Imminent Due To Choking IDRs