Q2 2020 Enviva Partners LP Earnings Call
[music].
Good morning.
Welcome to the Enviva Partners LP second quarter 2020 conference call.
All participants will be.
So do you need assistance, placing all conference specialist I personally starkey followed by zero.
After today's presentation, we will have an opportunity to ask questions.
Please note that is being recorded.
Now, let's turn the call ever to watch not Vice President Treasurer. Please go ahead.
Thank you good morning, welcome to the me about Ponderous LP second quarter 2020 financial results Conference call. We appreciate your you Chris you can be about partners under some people participating today.
This morning's call, we have junk copper chairman and CEO I wish I haven't Chief Financial Officer.
The agenda, we will be if were John's try to discuss our financial results released the yesterday and provide an update on our current peoples outlook. Then we will open up the phone lines for questions.
Before we got started a few housekeeping items.
During the course of our remarks and the subsequent <unk> session, we won't be making some forward looking statements, which are subject to a variety of risks.
You formation concerning the risks and uncertainties that could cause actual results could differ materially from those forward looking statements can be found the earnings release issued yesterday in the IR section on our website.
As we always the you are the most recent tuncay.
Other filings with the I see.
We assume no obligation to update any forward looking statements to reflect new our change events or circumstances.
Yeah addition to present, our with an actual results you know Cauldrons, Wisconsin, We will also be discussing adjusted EBITDA and certain other non-GAAP measures pretending to the complete its physical pure risk as well as our forecasts.
Information concerning a reconciliation of these non-GAAP measures, who they are most directly comparable GAAP measures and other rather than this quarter or are you create a novel press release issued yesterday I.
I would like them now turning over to Joe.
Thank you wish.
Good morning, everyone and thanks for joining us today.
Well covered 19 continues to dominate news headlines.
We're very proud of what we've been able to accomplishing the last few months you're in India.
First.
We've kept our people healthy and safe.
This has enabled us to keep our plants imports running 24, seven and our supply chain humming.
The durability and resilience of the business model, we have built ensured that we delivered operating and financial results that are right on track with our expectations.
Including printing at 39% increase in adjusted EBITDA over the same period of last year.
We also continued to execute on our growth strategy.
Closing two transformative acquisitions.
And completing the associated equity and debt financing activities, despite heightened market volatility.
Based on the expected adjusted EBITDA run rate of $56 million to $60 million by 20 to 24.
The combined price for the Greenwood, and Georgia biomass acquisitions implies an attractive six and a half times EBITDA multiple.
Based in part on the expected accretion from these transactions.
Our board declared a distribution of 76 and one half cents per unit for the second quarter.
Which represents our twentyth consecutive distribution increase and is 16% higher than the distribution for the same quarter of last year.
In addition.
We reaffirmed our full year 2020, adjusted EBITDA and distributable cash flow guidance.
As well as our expectations that we will distribute at least $3 per unit.
For full year 2020.
Which would maintain that 13% distribution CAGR, we've delivered since our IPO over five years ago.
The recent acquisitions increased the partnership's production capacity by one third and extend the partnership's fully contracted revenue backlog to $15.3 billion.
With a weighted average remaining contract term of 12.7 years.
Recognizing that there is still tremendous opportunity ahead of us our sponsor.
Which is played a highly supportive and critical role underwriting the growth profile the partnership.
As recently completed a recapitalization transaction with a diverse group of global investors.
As a result, and now has $300 million of new equity available to finance future growth.
Including construction of the significant pipeline of additional wood pellet production plants and deepwater marine terminals to meet the growing demand in our existing markets and fast emerging demand in new markets.
Hi design the partnership expects to have the opportunity to acquire these fully contracted assets.
And the associated long term offtake agreements in future dropdown transactions.
In Veeva is leading an industry that plays an increasingly critical role in the global fight against climate change.
The climate benefits of sustainably produced wood pellets, and the transparency of our sustainability and supply chain practices.
Really are SG attributes.
Our garnering international recognition by regulators policymakers academics.
Researchers and investors alike.
Notably.
Jeff Stevens value back Spring fund now inclusive capital.
Leading SG dedicated fund.
Anchored our recent equity issuance and we're delighted to add up to the partnership's board of directors.
I will take some time at the end of this call to provide more details on the recent acquisitions. The long term market drivers, our sustainability practices and development activities, taking place at the partnership and our sponsor.
But I would like to now I'll turn it over to shy to discuss our financial results for the second quarter.
Thank you John.
Well the second quartile Twentytwenty net revenue was 167 from $7 million as compared to one another 68.1 million below full Dick on funding Quartiles to anything.
The modest change was mainly attributable to an increase in sales volume of wouldn't OLED produced by default tissue facility and its similar reduction in sales volume of wood pellet procured from third parties.
During the second quartile Twentytwenty, we also recorded $12.1 million of other revenue, which included $8.9 million in payments from customers associated with modifying shipment on Bill Taco Bay uptake on drugs, which otherwise would have been presented in product sales.
For the second quarter of Twentytwenty gross margin was 27 from $7 million. It compares the gross margin of $16.5 billion for they've gone funding period of 2017.
The Japanese gross margin was $42 million for the second quarter Twentytwenty, it's compared to 28 million dollar for the second quartile financing.
Adjusted gross margin per metric ton was $49.55 for the second quartile twentytwenty as compared to $32 in 26 cents for the second quarter of winning team.
The increase in adjusted gross margin domestic dawn was mainly due to favorable customer contract mix as well as an increase in sales of pellet produced by double digit and similar reduction sales, though pellet procured from third parties.
Sales of pellets produced by our own facilities, if the higher margins than sales of pellet procured from built out these.
Net income for the second quarter of 2020 was $8.5 million as compared to net loss of $3.8 million for the second quarter plenty 19.
Adjusted net income was $8.7 million for the second quartile 22, NB as compared to adjusted net income of $7 million for the corresponding quarter of 2019.
Well the second quartile Twentytwenty developed as you've generated adjusted EBITDA of $37.4 million, an increase of 38.7% from the second quarter of dominant in the.
The increase in adjusted EBITDA was primarily driven by this FX those that contributed to the higher adjusted gross margin.
This dividend cash flow piles of any distribution that the EBIT was incentive distribution rights Peyto general partner was $25.9 million, which results in second quarter 2020 distribution coverage ratio of 0.61 times.
At the end of this second quarter as a result, though the successful equity issuance. John just mentioned, we had approximately $98 million of cash on hand with no balance outstanding under our 350 million dollar revolving credit facility.
On the overall solid second quarter financial result, and the successful closing of the Greenwood Engender Bandmates acquisition. The partnership reaffirm the increased full year Twentytwenty guidance, we provided in June.
We continue to expect full year Twentytwenty adjusted EBITDA to be in the range of 185 to one a $95 million and distributable cash flow to be in the range of London. If there was equal to $144 million biased to any distribution that debunked incentive distribution rights.
Data again about them.
The partnership also reaffirmed our June guidance to distribute at least three bill good common unit for full year 2020.
The guidance amounts do not include the impact of any additional acquisitions all dropdowns.
As we've said in the past seasonality and the mix and timing of customer shipments can impact results, which may vary from quarter to quarter.
Consistent with buyer is we expect the second half of 220 to be a significant step up from the first off even before accounting for any post acquisition contribution from our recently acquired Wynnewood and wake growth plan.
We have remained largely unaffected by the impact of coffee 19 pandemic on the global economy and capital markets.
In fact, we were able to successfully issued 200 million below those of equity, it's tied discount and in 150 million dollar take on to our existing 2026 bone at this strong premium in an extremely volatile market.
We believe we were able to execute these transaction because of the increasing recognition of the fully contracted and fed grain nature of our business, which has no material exposure to the buys of crude oil natural gas well either energy commodities.
As demonstrated with adrenal than Georgia biomass acquisition, we remain focused on financing growth with a 50 50 equity that split in ultimate Dan It conservative leverage ratio of Threeq Onefive two full time any distribution coverage ratio of one point good time on a forward looking.
General basis, and we expect our full year Twentytwenty distributable cash flow to cover 2019 distribution by at least 1.2 times.
Now I would like to tell me back to John.
Thanks shy.
The Greenwood and Georgia biomass acquisitions significantly expanded the partnership's production footprint.
Which now includes assets and operations and the robust fiber baskets in the states of South Carolina and Georgia.
The partnership now owns and operates nine fully contracted plants and exports from our wholly owned terminals in Chesapeake, Virginia, and Wilmington, North Carolina.
In addition to our contracted terminal capacity in Savannah, Georgia.
Panama City, Florida.
And mobile Alabama.
By adding the Puerto Savannah terminals to our portfolio.
We will benefit from greater redundancy in our export capabilities and heightened ability to mitigate business interruption risks.
We're also exploring developing another cluster of production facilities around this strategic asset in a new fiber basket.
With the two acquisitions and 1.4 million metric tons per year of Japanese contracts assigned by the sponsor the match the combined production capacity of the Waycross and Greenwood plants.
Our total contract backlog also increased by approximately $5.3 billion.
These two plants come into the partnership fully contracted through 2035.
We've contracted volumes well into the 20 fortys.
Our sponsor also recently executed a from 10 year 120000 metric tons per year take or pay off take contract with a major credit worthy electric utility in Japan.
This contract, which has a new customer to an increasingly diversified sales book.
The partnership in the sponsors combined off take contract backlog to almost $20 billion.
With a weighted average remaining term of 13.6 years.
This tremendous growth in our business continues to be driven by the commitment and significant progress made by regulators policymakers utilities and power generators around the globe to phase out coal limits the impacts of climate change and cut greenhouse gas emissions to achieved net zero by 2015.
We believe these tailwinds will continue to lead strong growth in global demand for our product.
The importance and impact we can have as demonstrably.
For instance.
In June.
I did kingdom completed a record breaking 67 day period without coal fired power.
During this period.
Which was the longest period without coal since the dawn of the industrial Revolution.
Biomass provided approximately 11% of the ucas electricity on average.
And up to 16% on days when the availability of wind and solar were limited.
In Germany.
In July.
Pass the call exit law to end coal fired power generation by 2038.
The coal exit law lays out a rapid timetable requiring an unprecedented shutdown of 43.9 Gigawatts of currently operating coal capacity.
Coal exit law also explicitly recognize the use of sustainable biomass as part of the transition.
And established a framework and a 40 billion Euro program to support power plant owners seeking to convert their plans from coal to alternative fuels, including biomass.
In Asia.
Japan's Matchy announced in early July the Japanese government would set policies aimed at the closure or suspension of low efficiency coal fired power plants by 2030.
Following the establishment of a framework expected by the end of this year.
It is estimated that approximately 100 power plants may be targeted for such closure or suspension.
Creating new potential opportunities for recycling this infrastructure into biomass fired renewable power generating assets.
In addition to international Policymaking, an action plan the call for increased usage of biomass to reduce fossil fuel power generation investors in the research community are also increasingly recognizing the carbon benefits of sustainably produced biomass.
A few weeks ago, we shared an independent study by boundless impact investing.
The third party research firm specializing in climate analytics for investors.
And it's recently peer reviewed and then published report.
Boundless impact estimated that in the United Kingdom.
Power generation Wood pellets sustainably produced in the U.S.
Results in an 87% reduction in greenhouse gas emissions versus coal and 71% versus natural gas.
The impact is even more pronounced and combined heat and power applications, reducing lifecycle greenhouse gas emissions by as much as 94%.
Part of the global opportunity in India that is to help stakeholders around the world better understand these carbon benefits.
To that end.
Our chief Sustainability Officer, Dr., Jennifer Jenkins.
Recently led the publication of White papers and provided a well received overview of the scientific basis for using bio energy to mitigate climate change.
Followed by two Webinars on this subject, including during the ease of use sustainability week in late June.
The meet demand from of sustainably produced biomass.
Within the partnership we have began commissioning several of the fully constructed new process islands as part of the North Hampton plant expansion.
And expect to similarly begin commissioning the south Hampton plant expansions over the next several months.
The anticipated benefits from these projects in Twentytwenty is included in the partnership's updated guidance.
And consistent with prior guidance beginning in 2021, we expect the expansions to deliver approximately $28 million to $32 million in adjusted EBITDA on an annualized basis.
And the Greenwood.
Procurement and detailed engineering activities associated with that plant expansion are well underway.
And the project remains on track for completion by yearend 2021.
Subject to receiving the necessary permits.
Finally.
Our sponsor also continues to progress the construction of the fully contracted Lucille plant and the Pascagoula terminal a civil work is underway and construction activities are ramping up at each site.
Our sponsor expects the construction of both projects to be completed mid year 2021.
In addition.
Our sponsor expects to make a final investment decision and commence preconstruction activities around the end of Twentytwenty further fully contracted EPS plant.
In summary, we.
We had a very busy an exciting quarter.
As I mentioned during our last earnings call.
We are a business built to weather many storms.
And we have certainly proven that again.
And then a global pandemic that continues to evolve.
We delivered a significant step up in adjusted EBITDA over the same period last year.
Generating $37.4 million.
We increased our distribution for the twentyth consecutive quarter.
And we completed two transformative acquisitions and raise the associated debt and equity consistent with our conservative financial policies.
Finally.
We reaffirmed our recently increased guidance for the year.
And with a critical role we play in the efforts by climate change.
We are really just getting started.
As I close.
I think the great people and visa for their hard work.
Continued dedication.
And ingenuity and coming up with new processes procedures and work practices.
To ensure we keep our people healthy and operate our business uninterrupted.
While at the same time, helping our communities.
As we work through the Corona buyers pandemic together.
Im privileged to be a part of the company with a strong business model.
Safe and stable operations.
And colleagues, who will continue to make sure we can deliver on the promises we have made well into the future.
Thank you.
Operator, please open the lines for questions.
We will now begin the question answer session to ask a question you Press Star then one on your phone.
Using a speakerphone please pick up your headsets for pressing the key.
If at any time your question has been addressable by to withdraw. Your question. Please press Star then queue. At this time, we will pause momentarily to assemble our roster.
Our first question comes.
Although scotto.
Of RBC capital markets. Please go ahead.
Hi, good morning, everyone change.
Little bit talk a little bit more about bill.
Potential opportunity from bile acid caramel, and how do you see that opportunity potentially playing out for and bull and have you been and discussions with any potential gentlemen.
Yes.
Well, Brian. Thank you very much great. Great question. The is as we've described previously Germany is a is a very important potential market for us they have been underway with some time or having made the commitment to fully phaseout coal as part of that process naturally the regulatory framework to shutdown coal.
It has come into pretty dramatic relieve including most recently the finalization of the coal exit law. The defines a very specific program of elimination of calls are generating resource across the German landscape, including shutting down about 44 gigs of coal that our operating on the great today.
Thats quite a significant opportunity for us and so the the framework like you've seen elsewhere in other jurisdictions. Initially provides for for the mechanisms by which major generators can begin to evaluate conversions of these coal fired assets into alternative fuels like biomass and so in parallel with that process, which has been under.
Away for about the last 12 or 18 months, we've worked quite closely collaboratively with a number but the major power generators utilities in the German market to assess those important assets that are not only condensing power stations, but also combined heating power stations that are very difficult to replace.
With intermittent renewables and so biomass provides a remarkable opportunity for many of these generators.
So we're pretty excited about it the the the the markets developing kind of right on path.
Yes, we continue to remain in direct dialogue with with several major generators and utilities in the market look forward to being an important part of their conversion plans.
Hi, Thank you for that.
Question I have there.
Over the last.
I wonder when the election and Democrats, we'll now take the household Senate.
And then of Biden has been pretty vocal about a transition to green energy.
Thanks, there would be a bigger opportunity for biomass growth here and we will add.
Well, it's quite an interesting question red. So so it is I read the Biden plan and I think we should all acknowledge is still pretty early in the overall overall cycle, but as I read divided Glenn the they're essentially calling for the same net zero targets that we see in Europe today, so to the extent that that.
Policy framework in that that commitment to a net zero outcome.
Remains a part of the platform I think biomass light like all renewables should see it should see a benefit.
Great. Thank you and then just like my last question and ill.
Hi, good has done a great job.
We did.
Dropdown.
On that third party acquisition in this challenging market able to raise equity and debt.
Sure.
When do you think and little full.
In a position where the partnership self axle, we have construct the Philadelphia burst.
Dropdowns from some of the sponsor.
So really really good question is something that we think a lot about and naturally heretofore, we've been absolutely fastidious and ensuring that lead insulated the partnership from the development risks from the construct and Chuck construction risk.
And the commissioning risk of new large scale assets.
During the course of the last year, we've we've begun to dip our toe little bit in the water is we had described as part of the north and South Hampton expansions and those were very very pleased with as we described in her prepared remarks, you know really begin in the commissioning of these assets and the fulsome EBITDA potential that we see coming out of those is quite remarkable.
As we think about the enterprise.
The partnership we want to make sure that we are sufficient scale that we don't need inadvertently change the risk profile the underlying business and so we remain very committed to.
Kind of sticking to our knitting.
But we are very mindful of the opportunity and the potential to continue to develop as our scale gets bigger and we tend to look at that is it from a free cash flow basis on a DCF basis that correlates to around the time that were in the sort of 300 million plus EBITDA range, but we're still little ways, where can that yet.
Great. Thanks very much.
Thanks Omar.
Our next question comes from Marshall Carver from Heikkinen Energy Advisors. Please go ahead.
Yes. Thank you so there was the.
Drop in volumes.
With some revenue impact between the first quarter in second quarter I.
I understand looking into Q that that was mostly third party volumes fell off or those third party plants.
Back online or more those the.
Thanks plants that you purchased.
Well I would now be internal fracs.
No. Thank you very much full so the question. So just to clarify there is not really much of a change in our total reported so it's just that this quarter. During the second quarter 2020, Debrabandere has evolved sales will out of the acute.
Our develop selling produced the pellets that we're producing throughout all the production plan.
As opposed to last deal that we had the.
Kind of like more than ever as in line with the previous period, we had it not volumes of two cute.
Volumes will tell policies that substantially will eliminated during this quarter.
So the acute volumes will jump out is almost designed to take opportunities when exist in the market and we typically deliver them into.
Into more likely to show them.
Sales agreement as opposed to all at normal portfolio, the long term offtake tangible based on contracts.
As you know we have very much higher margin on the produced.
Volume as opposed to multi boutique fueled volume.
Which is now a driving this growth, though the higher adjusted gross margin per metric ton and although our total adjusted gross margin as a result higher EBITDA for this quarter compared to the Cinco de left field.
So as you move to the third quarter would be procured volumes step back up or do you think those opportunities.
Yes.
Dropped off with a change in the market.
Yes, no I think it's a it's as I mentioned this is a part of our business on the sort of longitudinal basis annualize. It 10, 15%. So so we'll have some greater volumes in some quarters and some smaller the others, but.
It does feel.
Consistent on an annual basis agency, some reversion to that.
Okay and.
On the take or pay agreements.
Have all the customers continue to.
Take or if the if any.
Deferrals or any cancellations of anything.
Okay, so the 100% taking the volumes.
So it's a mix across our customer footprint as you may be familiar with you know we work with with all of our customers under our long term take or pay offtake contracts and in some cases they want to accelerate.
Shipments in some cases, they want to delay and in some cases that they may choose to cancel vessel, but as the is the take or pay concepts suggest we are we're paid a fee.
For the scheduling adjustments and were paid a cost to cover in the case of the cancellation that that their cost of cover accounts for the difference between what the what the price of that customers contract was compared to what we would have otherwise sold into the into a different customer.
And so on any given period, we'll have a mix of those are sometimes on him.
Okay and.
Last question would be.
Yeah I know your net income is expected to step up.
Significantly in the back half of the year.
For your guidance do you have any color between the third and fourth quarters is there.
You know.
Similar net income in Threeq, and Fourq, you or would there be of.
Mitch true or would one be higher than the other.
Yes, it's a good questions, although as we discussed we expecting the second of all deals to be a significant step up compared to the first alphaville.
Kind of like consistent with the pioneer and in general the we expecting.
Fourth quarter to be stronger compared to the till two of them.
Alright, thank you.
Good to talk to you Mark.
Our next question comes from Pavel Multichannel of Raymond James. Please go ahead.
Thanks for taking the question and.
You guys touched on Germany already obviously, an important topic I actually wanted to ask about opportunities.
To the east of Germany in places like Poland.
Lavaca, Bulgaria very cold centric.
Electricity mixes and now of course, you just approved be bake stimulis, including the energy transition funding and I'm curious if you anticipate kind of eastern Europe, becoming.
In emerging market for.
Pellets from the standpoint of decarbonization as we've seen in the west.
So look the familiar you're spot on the Poland is a market that has historically had an important role for biomass to play to mitigate the overall.
As you as you point out the overall preponderance of coal is generating resource. So it's a we tend to think that you know there their participation in the EU and their commitment to too.
Favourably impact and climate change biomass is going to play an increasingly important part of that co firing exist. There today, we expect that to continue there is obviously an important election coming up there and as we look across both check in Slovakia and some of the other other regions that as you point out our so dependent upon coal that the convergence of the sort of.
Green recovery.
With these countries participation in the greater importance as they contribute to mitigate any impacts of climate change in achieving a net zero impact we tend to think the biomass opportunities will continue to emerge there obviously in some of those jurisdictions a little bit further off than what we see in Germany, perhaps Poland, but we're very mindful of those and with the with the European team we.
Haven't place and folks in in Berlin today, they're paying attention that too.
Thanks. That's helpful. You also kind of flat its key attributes. This is a bit of a conceptual question can you just addressed the.
Push back that.
As you're well aware oftentimes gets raised regarding tell it switches that are not green enough because it involves.
Forestry, essentially chopping down trees for lack of a better word what sure response to that kind of common criticism.
Yes, Bill is look it's a good point right. There there are folks in the environmental community that.
Really what I would consider to be more of the purist approach and you say.
It's not green enough I think every time that question has been asked it's been answered in it in a highly pragmatic way, which you know whether it was read one read too when you look at that jurisdictions like the Netherlands, we've undertaken a really deep dive into the science into the mechanics and into into how countries around.
In the world are going to are going to achieve the climate change objectives, you've got the Netherlands. The the PBL, which is their equivalence of U.S. EPA undertook a very extensive consultation with with a broad range of stakeholders, including many of those that that you'd characterize as critics and their conclusion was what while there may be some some inquiry into this.
Not only can we not meets our long term biogens objectives without biomass, we actually have to use a lot more.
And we have to do it in a way that is sustainably produced and it was quite amazing they actually said in in a way that tracks and traces every on wood fibre kind of just the way Diva does today.
And so we're we're encouraged by that obviously is very consistent with what the UN I VCC has concluded about the holistic cycle between healthy growing for us that yield a steady stream of products that provide for everything from from permanent carbon storage in the sense of dimensional lumber and things like that but also the byproducts and again no ones.
And on a tree for Enviva, where that with a byproduct that harvest that find a high degree of utility in the aggregation and utilization that resource as as a displacement for coal so I think the.
I think every time the question hasn't continues to be answered, it's pretty favorable to the immediate impact.
That we can have on to the benefit of climate change the environment.
Last question from my end as you guys did.
A rare acquisition of a third party asset and I'm sure you're very selective when you do these things.
Are you aware of any other kind of one off like this that might be for sale.
Beyond the traditional dropdowns for from your parent.
Well, we will prevail, you're you're right. We're highly selective in the way that we think about acquisitions. The if we when we constantly does they really do you have to be some special because you know the the proven track record that we have.
Developing assets upstairs at a defines building copy basis fully can tracking those and dropping limited partnership we have such high fidelity on the financial outcomes about how those plants work.
It really takes some special and so we are selective obviously I can't comment on any any process that we would have underway but.
We do those pretty rarely and I think that that when we think about the pillars of our growth which are force the underlying organic growth within the partnership the drop down acquisitions.
Third leg of the school is just much less frequent.
Okay. Thanks very much.
Thanks for them.
Again, if you would like to ask the question you mean press Star and then one.
Our next question comes from Brian buyer of Goldman Sachs. Please go ahead.
Hey, good morning, hysterically on for Brian How are you hey, good morning to area.
Good thanks for taking my questions.
Just had one on you just kind of tagging onto the growth prospects appreciate all the detail that you'd given.
About what's going on in Europe.
Sort of related to that one of your large customers announced yesterday, some plans to significantly accelerate the investments in the renewable side of their business I guess would it be any thoughts around that and maybe what the implications for maybe further growth in the wood products market as a result of that.
Yes, no we are.
Obviously, we've been we've been very proud of the growth profile, we've been able to do you continue to generate and I don't think that.
Any anything except Tailwinds is the way that we're looking at that right. Now you know the markets that we see around the world, Japan elsewhere elsewhere in Asia as well as our proven markets the United Kingdom, The Belgium, Denmark.
Obviously, the Netherlands, and then the really interesting opportunities. We've just spent some time on including Germany.
All in some of the other places.
We're pretty bullish.
Clearly the commitment around the world to do a net zero to two to fundamentally changing what has historically been a very difficult questions all that between energy and environment, our ability to make a meaningful impact today and the customer inbounds and the pipeline that we've assembled leaves simply but we're right on track and don't see.
Any diminishment of those opportunities.
Great Thanks for that.
Then just maybe all around the quarter.
The $9 million payment that you got from their customers. Just curious if you incurred any additional and logistics cost or anything associated with those modifications or did that effectively dropped to the bottom line.
And then related and that just if you got to get some sense for maybe the the time that were impacted in the quarter, whether it with the take or pay.
On that and how we should be thinking about volumes in the back half of the or was it maybe a 100 150000 tonne maybe the right way to frame.
The lost tons here that you just got compensated for.
Yes, and I think as shy commented earlier than I think it was we answered that and one of a previous questions.
Say that the scheduling line in the when you look at that and the other revenue line. That's it that's a mix of payments from customers, including those that accelerate or delay and as you point out in some cases cancel both but that take or pay component means that really what we're doing is a cost to cover payment relative to volumes that we then sold into existing customers.
Is the delta that easy reflected there. So you would not have any incremental cost nor do we necessarily see a volume trade off against that.
Okay, great. Thanks for the details there good luck in the quarter guys.
Derek Thanks, so much great to hear from you.
And no more questions at this time. This concludes the question answer session I would like to turn the conference back over to John Catholic for any closing remarks.
Well, thanks, everybody for taking the time to join US again today we.
We're privileged to be in the position that we are in and we believe we have a responsibility to keep it up.
Im looking forward to connecting again next quarter and I would ask that in the meantime, we'll continue to please stay safe Im pleased to healthy.
We are all in this together and together we will all get through this.
Thank you so much.
The conference is now concluded. Thank you for attending today's presentation you may now disconnect.