Enviva : Non-Reliance on Previously Issued Financial Report - Form 8-K

Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

On February 29, 2024, the management of Enviva Inc. (the "Company") and its Board of Directors (the "Board") concluded that the Company's unaudited Condensed Consolidated Statements of Operations for the first, second, and third quarters of 2023 (collectively, the "Restated Periods"), previously reported in our Quarterly Reports on Form 10-Q for the periods ended March 31, June 30, and September 30, 2023, respectively, should no longer be relied upon. This conclusion was based principally on the need to correct the classification of approximately $33 million recoverable from customers for certain handling costs that the Company incurred at discharge ports for its wood pellet shipments. These amounts affected the Restated Periods by approximately $6 million, $7 million, and $20 million for the three months ended March 31, June 30, and September 30, 2023, respectively. The Company determined that the impact of these errors on prior fiscal years was not material.

The Company typically arranges for shipping services to deliver its product sales of wood pellets to its customers' discharge ports. While in transit and at the discharge port, the Company may incur certain handling costs including demurrage charges which are associated with the duration of the voyage and any storage costs due to delays. These handling costs are partially or fully reimbursable to the Company by the Company's customers. The Company has an accounting policy to treat product handling costs as a fulfillment activity which requires such reimbursements of handling costs to be recognized as product sales revenue, rather than a reduction to cost of goods sold. However, these reimbursements have been recorded as a reduction to cost of goods sold in error.

The impact of correcting the classification of the reimbursements of handling costs is to increase product sales revenue and cost of goods sold in equal and offsetting amounts for the Restated Periods. The correction of the classification for these reimbursements has no effect on reported loss from operations, net loss, cash flows, or any liquidity measure.

The Company intends to include restated unaudited Condensed Consolidated Statements of Operations for the Restated Periods in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 Form 10-K"). In addition, the Company will further revise the financial statements for the Restated Periods to correct other errors that are unrelated and immaterial.

The Company has not filed and does not intend to file amended Quarterly Reports on Form 10-Q for any of the Restated Periods. Investors and others should rely on the financial information and other disclosures regarding the Restated Periods included in the forthcoming 2023 Form 10-K and in subsequent future filings with the U.S. Securities and Exchange Commission. The Company's management has discussed the matters disclosed in this current report with Ernst & Young LLP, the Company's independent registered public accounting firm.