- Even though the wood pellet producer Enviva Partners is environmentally sustainable, sadly this sustainability does not extend to their distributions.
- The primary issue remains their distribution payments being larger than even their operating cash flow, which simply makes them unaffordable.
- Following their latest acquisition, their distributions are set to grow even larger thanks to their IDRs in the short term with their earnings only broadly catching up later in the future.
- This appears to further hurt their safety in the short term whilst doing little at best to help even in the medium term.
- When considering their very high leverage that further amplifies risks, it should be no surprise that my bearish rating is being maintained.
For further details see:
Enviva Partners: More Units Means More Problems